Survey Says Gas Prices Will Surpass $3 Before 2000
A sample of energy industry experts attending the Dain Rauscher
Wessels Energy Conference in Houston expect prices to strengthen
toward the end of this year, only to give way to general price
weakness in 2000. Many of the 146 people polled at the conference
said they expected gas prices at the Henry Hub to surge towards
$3.10 before the end of this year, then fall to the $2.50 level
early next year. Overall, 800 energy industry experts, company
representatives, institutional investors and securities analysts
attended the four-day conference, which ended last week.
The poll was distributed to all attendees. Respondents were
asked six questions about oil and gas prices, stock performance and
energy companies likely to merge. Answers to the pricing questions
were averaged to calculate the results.
"The results reflect some skepticism about the current commodity
price environment," said Jim Wicklund, managing director and head
of energy research at Dain Rauscher Wessels. "However, the
expectation is that prices will be high enough to continue pushing
stocks and activity higher. They all believe the oil patch recovery
The fact that many in the industry are not bullish about prices
in 2000 is an effect of the previous warm winters, Wicklund said.
"We assume that the record warm winters seen over the past two
years have made many of the participants somewhat cynical."
Yet, despite what others in the industry feel, Wicklund is a
bull. "Overall, considering the very harsh operating environment
the oil and gas industry has seen over the past 18 months and how
weak the cyclical recovery has been so far, the consensus outlooks
are actually very bullish."
Oil prices were predicted to retreat slightly from the current
price of $24 per barrel to $22.70 by the end of this year with an
average price for the year 2000 placed at $20.70. The poll also
found that the vast majority of respondents believed that crude oil
production would increase over the next year by an average of 2.7%.
The group also took a stab at the next merger candidates,
answering that Chevron and Texaco were the "favorite pair for a
successful marriage of oil companies." Nearly every oil company
made the list, but those two companies were included in more than
15% of the survey responses.
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