US natgas producers see flat market for summer

23 May 2007 17:49  [Source: ICIS news]

WASHINGTON (ICIS news)--US natural gas producers said on Wednesday that supply and demand pressures will likely be flat for the North American summer season, but they cautioned that any changes in weather could drive demand and prices higher.

 

The Natural Gas Supply Association said in its annual summer outlook that while the US peak temperature months - June, July and August - were forecast to be less hot than last year, the modest but ongoing US economic expansion would likely offset any price declines that a cooler summer otherwise might bring.

 

The North American summer season typically produces a strong increase in natgas consumption by electric utilities as consumers run residential and commercial air conditioning systems longer to combat the heat.

 

That additional demand often can send gas prices up, a concern for US chemicals manufacturers which are almost wholly dependent on natgas as a feedstock. 

 

Chemical producers also get hit hard when the knock-on impact of higher gas prices boosts power costs.

 

While the association does not predict gas prices, it said pricing this summer may also be influenced by marketplace fears of a tough hurricane season ahead. 

 

US government weather forecasters said on Tuesday that the 2007 hurricane season, 1 June through 30 November, was likely to be above normal, with seven to 10 hurricanes coming out of their Atlantic Ocean breeding grounds toward US shores.

 

Double hits by Hurricanes Katrina and Rita on the US Gulf coast in August and September 2005 caused massive damage to oil and gas production and triggered gas price spikes to as much as $15/m Btu.

 

“The still-fresh memory of Hurricanes Katrina and Rita in 2005 is keeping the marketplace a little jittery,” said association chairman Chris Conway.

 

US natgas prices have been in the $7-8/m Btu range lately. Last summer US gas prices ranged from an average of just under $7/m Btu in June to around $7.40/m Btu in August.

By: Joe Kamalick
+1 713 525 2653

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