Raymond James analysts have an “unusually high degree of confidence” that domestic natural gas-driven stock prices will move up in an “unusually short period of time,” and now believe that there is a better than 75% probability that gas leveraged energy stocks will move up significantly in the next six to eight weeks.

In the latest “Stat of the Week,” the analysts, led by Marshall Adkins, said their near-term optimism is based on a “meaningful imbalance in our U.S. natural gas supply/demand model,” which is “screaming that decreasing U.S. natural gas supply is rapidly careening toward a train wreck with increasing weather-driven gas demand.” More important for investors, they said, “this pending spike in U.S. natural gas prices is likely to drive a meaningful upward move in U.S. gas-weighted stocks.”

Although it appears “everyone” is bullish on natural gas, analysts noted that the 2003 consensus gas price forecasts are “hovering around $3.50/Mcf.” Although the Street is usually bullish on gas, “we believe it is significantly underestimating both the magnitude and the duration of this upcoming natural gas price move.”

Specifically, analysts found there is “unprecedented convergence of bullish gas fundamentals that should hit the gas markets in the next two months. We have identified three key fundamental natural gas drivers that have never occurred simultaneously…until this winter,” which they said were the following:

“Rarely (if ever) in the past 10 years have we ever seen a convergence of bullish fundamental factors that give us as high a confidence level in as short of a time frame for higher natural gas prices,” said analysts. “We believe that there is a very high probability that U.S. natural as prices move well above $5/Mcf (this means $7 or $8/Mcf is likely and double-digit gas prices are not out of the question) in the next six to eight weeks.”

Analysts also are convinced that sustainable high prices are likely because the U.S. gas supply is falling at a fast rate and nearly 25% of industrial gas consumers have been eliminated over the past two years. “That means investors should pay attention to that whistling in their ears since it is probably energy stocks leaving the station. All aboard?”

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