Consultant

The unexpected increase in oil prices in the second quarter has boosted the third quarter natural gas forecast by management consultant R.W. Beck. Last Tuesday, Beck revised upward its prediction of the annual average price at Henry Hub by 50 cents/MMBtu to $5.86.

The unexpected increase in oil prices in the second quarter has boosted the third quarter natural gas forecast by management consultant R.W. Beck. On Tuesday, Beck revised upward its prediction of the annual average price at Henry Hub by 50 cents/MMBtu to $5.86.

The proposed Sempra Energy-Shell joint venture North Baja, Mexico, liquefied natural gas (LNG) project has the best chance among current ones proposed in Mexico to actually come to fruition, but even it still faces some major questions, according to a U. S.-based expert monitoring energy developments in Mexico.

The proposed Sempra Energy-Shell joint venture North Baja, Mexico, liquefied natural gas (LNG) project has the best chance among current ones proposed in Mexico to actually come to fruition, but even it still faces some major questions, according to a U. S.-based expert monitoring energy developments in Mexico.

Consultants at Energy Security Analysis Inc. said they expect the U.S. gas market to become the “sink” for any unwanted or spillover global LNG supply in the future, which means significant downward gas price pressure and a struggle for domestic gas producers. However, not all market experts agree on that assessment. Benjamin Schlesinger, president of Schlesinger and Associates Inc. in Bethesda, MD, said that such fears are unfounded.

Futures traders were shocked by the second record weekly gas storage injection in a row last week, but at least one market expert is calling for a third record injection this week, which could send prices down much further.

Futures traders were shocked by the second record weekly gas storage injection in a row last week, but at least one market expert is calling for a third record injection this week, which could send prices down much further.

Unlike the sharp drop and subsequent recovery of natural gas storage stocks in the winter of 2000-2001, today’s low storage levels may be a continuing phenomenon, analyst Stephen Smith said, indicating “embedded tightness” in the system.

With the current difference between the injection season (May-October) futures strip and the futures strip for next winter (December-March) at only about 11 cents, something clearly has to give, Energy and Environmental Analysis Inc. (EEA) said in its Monthly Gas Update. Injection season-withdrawal season spreads are only about 3 cents currently, not even close to the amount needed to cover the cost of interruptible storage.