+------------------------------------------------------------------------------+
U.K. Gas Prices May Fall on Import Gains, Goldman Sachs Says
2010-10-15 04:44:28.616 GMT
By Dinakar Sethuraman
Oct. 15 (Bloomberg) -- U.K. natural gas prices may fall
because of increased imports and U.S. gas futures in New York
may rise as factories step up production, Goldman Sachs Group
Inc. said.
"Higher liquefied natural gas import flows will put
downward pressure on U.K. National Balancing Point prices,"
Allison Nathan said in a report dated Oct. 14. "We continue to
expect incremental demand from coal-to-gas substitution in power
generation and rising industrial demand to put some upward
pressure on Nymex gas prices in the near term."
U.K. November gas is trading at 47.88 pence a therm or
about $7.65 per million Btu. U.S. gas futures may rise above the
$4 per million British thermal units threshold, as suggested by
winter month contracts, Nathan said. Gas for November delivery
is trading at $3.656 per million Btu in New York with December
contracts down 27 percent this year at $4.015.
Gas production in the U.S., which has pressured prices amid
lower demand, will average 61.29 billion cubic feet a day this
year, according to the U.S. Energy Department, the most since
1973. Output will be 2.2 percent higher than last year.
"U.S. natural gas balance has softened, driven by weaker
demand in a context of still very-high supply levels," Nathan
said.
Any price decline may be limited as summer demand has cut
stockpile estimates to 3.74 trillion cubic feet at the end of
October from an April forecast of 3.95 trillion, according to
the analyst.
Goldman's 12-month price forecast for U.S. gas was $5.75
per million Btu while that for U.K. gas was 34 pence a therm,
according to the note. U.S. gas prices may rise to as much as
$6.50 per million Btu "in a year or two," David Greely, chief
commodities strategist and head of energy research for Goldman
Sachs, said in June.
U.K. gas for November rose 1.03 percent to 47.88 pence a
therm yesterday in London, according to broker data compiled by
Bloomberg. Gas is higher by 41 percent this year. A therm is
100,000 Btus.
Global LNG demand may grow 20 percent to reach 215 million
metric tons this year because of a "strong" economic recovery,
Sanford C. Bernstein & Co. said in a report yesterday.
For Related News and Information:
Top Stories:TOP <GO>
Link to Company News:BG/ LN <Equity> CN <GO>
--Editors: Jane Lee, John Viljoen.
To contact the reporter on this story:
Dinakar Sethuraman in Singapore at +65-6212-1590 or
dinakar@bloomberg.net
To contact the editor responsible for this story:
Clyde Russell at +65-6311-2423 or
crussell7@bloomberg.net
