Associates

Recent weather-driven improvements in the U.S. natural gas market notwithstanding, Raymond James & Associates Inc. energy analysts are holding to their contrarian view on U.S. gas prices. A major gas supply increase this summer, brought on by increased liquefied natural gas (LNG) shipments, “should translate to gas-on-gas competition” later this year.

The debate over the peak oil theory revved up Thursday after Cambridge Energy Research Associates (CERA) and IHS Inc. said their indepth analysis puts the aggregate global decline rate at 4.5%, or only about half the 8% rate that many industry pundits have pegged. The analysis did not include natural gas fields, but CERA is working on a companion study on North America, CERA Chairman Daniel Yergin said.

The debate over the peak oil theory revved up Thursday after Cambridge Energy Research Associates (CERA) and IHS Inc. said their indepth analysis puts the aggregate global decline rate at 4.5%, or only about half the 8% rate that many industry pundits have pegged.

Raymond James & Associates Inc. affirmed recent private and government forecasts that U.S. natural gas production is indeed on the rise, but the ever-bullish energy analyst said last week that the growth’s long-term sustainability is “unlikely.”

Raymond James & Associates Inc. affirmed recent private and government forecasts that U.S. natural gas production is indeed on the rise, but the ever-bullish energy analyst said the growth’s long-term sustainability is “unlikely.”

The normally bullish energy team with Raymond James & Associates Inc. Monday said U.S. natural gas prices may rally toward the end of this year, but plentiful supplies and an overabundance of storage could lead to a “disaster” in 2008.

With the expectation of falling gas prices and closer alignment of the Nymex strip with the spot market, Raymond James & Associates Inc. — which last week cut its 2008 gas price forecast to $7/Mcf from $10/Mcf (see Daily GPI, Sept. 18) — recommends that investors pursue an oil-focused strategy.

Raymond James & Associates Inc. issued a mixed forecast on natural gas last week, predicting U.S. natural gas prices may rally toward the end of this year, but plentiful supplies and an overabundance of storage could lead to a “disaster” in 2008. Meanwhile, the Energy Information Administration (EIA) said the uptick in Rocky Mountain gas supplies and the limited export capacity will cause volatility until more pipes and storage faculties in the region are on line.

Entering 2008, U.S. gas prices could rebound to a 7:1 or even 6:1 ratio with crude oil, depending on the weather, according to analysts at Raymond James & Associates Inc. So $70 oil could mean $10 gas or better. For this bullishness on prices, thank Raymond James’ pessimism about the exploration and production (E&P) industry’s ability to grow production.