Salomon

Despite the record rig count, gas production isn’t picking upspeed the way many expected, according to Robert Morris of SalomonSmith Barney. Gas production decline rates are extremely high andthe United States will be lucky to see production growth of 3% thisyear, Morris said during a conference call Friday.

Salomon Smith Barney (SSB) analysts calculate that theunprecedented price surge this winter drove a significant amountmore demand out of the market than previously envisioned. With therecent decline in prices, however, some of that lost demand isreturning to the market.

Discounting recent short-term predictions for warmer weather,Salomon Smith Barney added another 75 cents to its gas priceforecast for this year. The prediction now totals $5/MMBtu at thewellhead or about $5.15 at the Henry Hub, but SSB still fears itmay be too low given the storage and gas production situation.

Discounting recent short-term predictions for warmer weather,Salomon Smith Barney added another 75 cents to its gas priceforecast for this year. The prediction now totals $5/MMBtu at thewellhead or about $5.15 at the Henry Hub, but SSB still fears itmay be too low given the storage and gas production situation.

For those who are still scrambling for explanations on why gasprices have reached record levels, Salomon Smith Barney (SSB)meteorologist Jon Davis offered a brief synopsis last week of whathappened with the weather last month. November 2000 was the secondcoldest November in 106 years and it was a complete reversal fromNovember 1999, which was the warmest November in 106 years.

For those who are still scrambling for explanations on why gasprices have reached record levels, Salomon Smith Barney (SSB)meteorologist Jon Davis offered a brief synopsis last week of whathappened with the weather last month. November 2000 was the secondcoldest November in 106 years and it was a complete reversal fromNovember 1999, which was the warmest November in 106 years.

Salomon Smith Barney (SSB) predicts there will be 405 Bcf moregas in storage at the end of the winter heating season on April 1than the average level of stored gas at the same point over thepast four years. The investment firm raised its forecast forseason-ending storage levels by 72 Bcf last week to 1,306 toreflect lower-than-expected withdrawals for the week ending Feb. 5and 20% warmer than normal weather expected for the week endingFeb. 13. The forecast would put storage levels on April 1 about 247Bcf higher than levels at the same point last year. According tothe American Gas Association (AGA), storage levels currently are428 Bcf higher than they were at the same point last year.