Predict

Consultants at Friedman Billings Ramsey (FBR) have raised their natural gas price forecasts for 2003, 2004 and 2005 based on the conclusion that total natural gas supply will fall about 3.6 Bcf/d short of demand by 2005. FBR concludes that amount of demand will have to be priced out of the market, and the industrial sector will suffer the most.

More than one trader got fooled trying to predict Thursday’s market. Sources had been near consensus Wednesday in expecting that day’s price slide to continue. Instead, cash quotes managed a fairly strong rally, rising between about a dime and a quarter nearly across the board. Only a nickel loss at the Algonquin citygate ran against the overall market grain.

By this summer, at least two more energy trading companies — more likely asset-light instead of asset-heavy — may be forced to file for bankruptcy, which will offer opportunities for other companies, and perhaps even an opening for new trading players, a panel of energy executives forecast last Tuesday. Speaking at the UBS Warburg Global Energy & Utilities Conference in New York City, the panel agreed that companies most likely to succeed will be the multi-dimensional players, with balanced portfolios that operate in both high or low volatility markets.

By this summer, at least two more energy trading companies — more likely asset-light instead of asset-heavy — may be forced to file for bankruptcy, which will offer opportunities for other companies, and perhaps even an opening for new trading players, a panel of energy executives forecast Tuesday. Speaking at the UBS Warburg Global Energy & Utilities Conference in New York City, the panel agreed that companies most likely to succeed will be the multi-dimensional players, with balanced portfolios that operate in both high or low volatility markets.

New England natural gas officials and key distributors predict that the region will have ample gas supplies to meet this winter’s heating demand, even if the existing embargo on liquefied natural gas (LNG) tankers into Boston Harbor should remain in effect for a prolonged period.

The near-term risk of more natural gas price erosion led analysts at ABN-AMRO and Lehman Brothers to downgrade their 2002 forecasts for several U.S. exploration and production company stocks this week. ABN-AMRO lowered its view of 2002 natural gas prices to $3.75/Mcf from $4.20/Mcf, but noted the new level “still represents a lofty and highly profitable commodity price for E&P companies.”

It was an easy call to predict lower prices for the low-demand Memorial Day weekend, so nobody got caught by surprise Friday when an across-the-board dive swept the market. No point fell less than 20 cents, and western declines tended to be significantly larger than that.

It was a no-brainer to predict Thursday’s plunging market. Amajority of price losses were between 80 cents and a dollar, aschilly but seasonally mild weather prevailed in most areas, thescreen continued to go south and traders perceived AGA’s Wednesdayafternoon storage withdrawal report of 167 Bcf as a below-parvolume.

No one can really predict the weather, “but at the rate winteris setting in, by the middle of February we’ll be where we usuallyare in April” in regard to natural gas in storage, according toThomas A. Petrie, chairman of Petrie Parkman & Co. in Denver.