Predicting

Natural gas futures have done a “far better job” of predicting gas prices than crude oil futures have of forecasting oil prices, a noted energy economist said last Wednesday.

Natural gas futures have done a “far better job” of predicting gas prices than oil futures have done in forecasting oil prices, a noted energy economist said Wednesday.

XTO Energy Inc. issued guidance last week, predicting that its natural gas production could jump as much as 15% this year to 1.41 Bcf/d and its total gas equivalent production could rise nearly 12% to 1.76 Bcfe/d — those are the high ends of XTO’s projected ranges.

XTO Energy Inc. issued guidance Tuesday, predicting that its natural gas production could jump as much as 15% this year to 1.41 Bcf/d and its total gas equivalent production could rise nearly 12% to 1.76 Bcfe/d — those are the high ends of XTO’s projected ranges.

Now that much of the country has finally seen weather that can be called winter-like, Raymond James & Associates Inc. analysts are predicting that the current year-over-year gas storage surplus of 354 Bcf will be completely wiped out over the next three weeks and storage will stand at about 1,500 Bcf by winter’s end. Further, they predicted that gas prices have seen their lows for the year.

The gas storage surplus could have a bite taken out of it this week, according to consultant Stephen Smith, who’s predicting only a 17 Bcf injection in the weekly report by the Energy Information Administration (EIA). Furthermore, Smith believes that this week’s storage report, which he expects will show 3,459 Bcf of working gas in storage as of Oct. 20, may end up being the peak level of working gas for the injection season because of the early cold weather.

With high storage levels for all the winter heating fuels and forecasts of warmer than normal temperatures, FERC staff is predicting a relatively good winter ahead for energy consumers and sees no red flags on the horizon for market participants.

Canada’s National Energy Board (NEB) released its summer energy outlook Thursday, predicting that high natural gas storage levels would lead to a drop in Henry Hub natural gas prices to about $5/MMBtu by September, but the agency also said it expects gas prices to rebound during the winter because of a continuing tight supply-demand balance. Electricity supplies are expected to be adequate in most of the Canadian provinces with the possible exception of Ontario.

Power authorities in New York and Texas are predicting ample electricity supplies for this summer, but the years ahead are less certain. New York still must resolve siting issues that are impeding generation capacity growth, some say. And Texas must be mindful that the plants that generators are planning to build actually come to fruition.