Management consulting firm R.W. Beck reduced its calendar 2006 forecast for the Henry Hub price of natural gas to $7.60/MMBtu. The new price is $1.40 lower than the $9/MMBtu price R.W. Beck predicted during the first two quarters of 2006.
The decrease stems primarily from January’s mild weather, which led to lower prices during the second quarter. The firm lowered its 2007 projection to $7.20 from $7.38.
“Taking into account the current storage overhang, with normal injections for the rest of the summer, we are projecting a Nov. 1 inventory of 3.55 Tcf, only 0.25 Tcf higher than the previous high recorded in 2004,” said Catherine Elder, leader of R.W. Beck’s natural gas and fuels practice in Sacramento, CA. “We, therefore, don’t think prices will go much lower, absent an extraordinarily mild summer or lower oil prices.”
She added, however, that unresolved world tensions may lead R.W. Beck to maintain the current assumption of oil at $65/bbl for 2006 into 2007. Doing so would increase the 2007 forecast natural gas price from $7.20/MMBtu to $7.79/MMBtu.
R.W. Beck’s long-term forecast shows prices declining to around $4.75 per MMBtu by 2010, based on a variety of assumptions.
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