Cambridge Energy Research Associate’s Tom Robinson said this week that by the end of the year his firm expects gas market fundamentals to begin showing signs of improving with the gas supply bubble deflating significantly. And while there will be plenty of supply through 2002, said Robinson, it will, of course, depend on how hot it is this summer.

Robinson, speaking at CERAWeek 2002’s Executive Conference in Houston, said next winter could put the United States in a strong storage position — as long as the winter also follows normal patterns. “It does raise questions if we have cold weather,” he said.

Regarding the confidence in the commodities markets, and a “rush to judgment” that may lead to tighter regulation of the energy trading industry, Robinson said the “real question is that when these events happen, we have to step back and let cooler heads prevail.” Investors, he said, don’t have a “strong level of confidence” right now, but as long as the energy industry remains focused, he foresees no stricter regulation or a turn to re-regulate the market.

“This is a challenge we will see in the industry,” said Robinson. The challenges are more than just those focused on credit issues, however. With surplus capacity building, Wall Street is not as keen on funding new development either. Now, companies are pondering how to finance projects in a gloomy capital environment. Project financing is expected to be put on the back burner at least until energy prices rise again — but it also puts some with cash to spend in a position to pick up more assets or merge with financially strong companies.

For some companies, though, coming back strong may be a problem as long as commodity prices stay low and bankers remain cautious. “I am very concerned about liquidity,” said Alexander M. Kloosterman, senior executive vice president of ABN AMRO Bank NV. Echoing the thoughts of other executives at the conference, Kloosterman said he had seen enough “surprises.”

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.