Key pressure points influencing the price of natural gas this summer — the economy, storage, consumption and supply — are expected to be flat with last summer, providing a more stable market than a year ago and a “measure of relief” for consumers during the June through August period, the Natural Gas Supply Association (NGSA) said in its latest outlook. While the forecast is an improvement over last summer, the producer group stressed that the gas market still remains very tight.

A major uncertainty will be the weather — prolonged heat waves and potential hurricanes — in the months ahead, said NGSA Chairman Chris Conway, president of gas and power for ConocoPhillips, in presenting the group’s fourth annual “Natural Gas Summer Outlook” Wednesday in Washington, DC. The National Oceanic and Atmospheric Administration is predicting a warmer than normal summer in the South and West, but the weather’s likely to be milder than that experienced during the summer of 2005, which was the tenth warmest on record, he noted. The agency also sees another active hurricane season ahead.

Nevertheless, the NGSA expects the weather to have “less…influence” on natural gas prices in the upcoming months, Conway noted. He said ConocoPhillips is “better prepared” for hurricanes this year, and will “respond quicker and better” to the storms. But “will all those preparations eliminate the risk that there could be adverse impacts on price? I don’t think so,” Conway told reporters.

The gas producer group sees storage inventories beginning the summer at 1.7 Tcf and ending the season at 3.52 Tcf, which Conway said would be “near the working storage maximums” for the industry. “If you see storage continuing to build during the summer, later in the summer it can become a significant [downward] influence on price,” he noted.

“Barring any wildcard events like heat and hurricanes impacting storage levels before that time [end of summer], storage will become more of a downward price influence at that point.” But for now, the NGSA sees little, if any, downward price pressure from storage. Although weekly storage injections will fall to an average of 59.7 Bcf this summer, “it appears storage demand during the summer period will actually be off by only about 0.8 Bcf/d, not quite enough in our estimation to result in downward pressure during the entire season,” Conway said.

If storage inventories reach the full working gas capacity of 3.5 Tcf by September, he conceded that producers may then be forced to shut in some of their gas production. “Certainly if we get to a circumstance where storage is at or near full, you’re going to have an impact on production…I think we’ll know better as we approach September what it’s going to look like.”

Storage-induced shut-ins are not a certainty, but they are a “potential circumstance that could occur” this summer, he said.

The NGSA predicted that gas consumption during the cooling season will be 51.3 Bcf/d, 0.2% below the summer 2005 demand level of 51.4 Bcf/d. “Cooler weather this summer will likely result in lower demand for electricity and, consequently, lower levels of gas-fired generation, leaving room for the return of some industrial demand,” the producer group said.

Total U.S. gas supply (including Canadian imports and liquefied natural gas imports) is expected to be 59.6 Bcf/d during the summer months, up slightly from 59.3 Bcf/d last summer, the NGSA said. Domestic production will inch upwards to 50.4 Bcf/d, while Canadian imports will fall to 8.6 Bcf/d and LNG imports will rise to 1.8 Bcf/d from 1.5 Bcf/d last summer, it noted.

The NGSA said it sees little impact on gas prices from the economic front. It anticipates steady economic growth during the summer months, lower unemployment, higher industrial production and a 3.4% inflation rate.

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