Analyst

Despite the rising storage surplus, natural gas prices have been increasing over the past three months, but a “good share” of the higher prices has followed the rising price of oil, noted Stephen Smith Energy Associates. However, if oil prices remain in the mid-$30s/bbl range and there is a warmer-than-normal summer, gas prices could reach as high as $6.50-7.00/Mcf in July and August, Smith said.

Nearly mirroring survey results of other energy analyst groups in recent days, Raymond James said last week that U.S. natural gas production fell 4.2% in the first quarter year-over-year, and “as before, we see no significant near-term catalysts to alter the declining supply picture, and therefore, price rationing remains the only viable option to bring the market into equilibrium.”

Calling the period that the energy markets are entering a “dramatically new phase,” Alan Levine, senior vice president of the Morgan Stanley Private Client Futures Group, said higher natural gas prices — mainly above $6 — are likely here to stay.

Nearly mirroring survey results of other energy analyst groups in recent days, Raymond James said Monday that U.S. natural gas production fell 4.2% in the first quarter year-over-year, and “as before, we see no significant near-term catalysts to alter the declining supply picture, and therefore, price rationing remains the only viable option to bring the market into equilibrium.”

Marathon Oil Corp.’s first quarter profit fell 16% from a year ago after property sales cut into oil and gas production, but the company still surpassed analysts’ forecasts by two cents.

After failing to move above last week’s high despite a positive open, the natural gas futures market turned lower Monday as speculative traders reestablished short positions. Concerns that this week’s storage report will feature a small net drawdown also added to the bearish price sentiment, prompting buyers to pull back their bids.

The conventional view is that liquefied natural gas (LNG) imports in the coming years will set the price for natural gas, however, even in the most optimistic scenario, LNG imports of 0.5 Bcf/d per year will at best only offset the decline in North American supply, according to an analysis by Southwest Securities’ John Gerdes.

The conventional view is that liquefied natural gas (LNG) imports in the coming years will set the price for natural gas, however, even in the most optimistic scenario, LNG imports of 0.5 Bcf/d per year will at best only offset the decline in North American supply, according to an analysis by Southwest Securities’ John Gerdes.

As if finally recognizing that they’ve been coasting higher recently in the face of fairly weak seasonal demand, prices yielded to bearish fundamentals Tuesday in posting declines ranging from 1-2 cents at a couple of western points to 15 cents or so. Most losses were around a dime. Transwestern-Permian was an aberration with a small gain.