That would not be for 2012, Goldman is recommending going long on natural gas in the summer of 2013. The bank sees natural gas prices averaging US$4.00/mmbtu in 2013. Here’s what the analyst said:
“A return to normal winter temperatures next year combined with slower production growth off the declining natural gas rig count will substantially reduce the amount of overall coal-to-gas substitution that will be needed next year, setting the stage for a return to higher prices in 2013,” analyst David Greely said in a research note dated April 11.
We all know natural gas prices won’t stay low forever, after all, the cure for low prices are lower prices. However, for 2012, I expect more pain to come for natural gas particularly in the months of September and October. A mild summer this year would be the perfect storm to follow a warm winter. I would not be surprised at witnessing bankruptcies and massive shut-ins of natural gas production simply because the infrastructure will be clogged with NG. Natural gas prices in both the US and Canada are currently at record 10 year lows, will US power generation save the day? It will depend on the sustainability of the extra 6 BCF/d in demand that appeared earlier this year.
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Have a Great Weekend!