EIA Summer Outlook – Good for Natural Gas Stocks?


The surprise Northeaster blowing off across the eastern United States may possibly have supported the last underside for hibernating propane and coal bed methane (CBM) company stocks.

The EIA prediction higher propane costs, and this summer, whilst spot WTI crude oil prices are anticipated to diminish. “On an yearly basis, the Henry Hub spot price is predicted to average roughly $7.83 per mcf at 2007, an 89-cent rise from the 2006 average, and also $8.11 per mcf at 2008.” The EIA anticipates summer 2007 natural gas prices to grow by 17.7 per cent on the last summer. With this particular calendar year, propane prices will rise by 12.8 per cent over 2006 a-basin.

The statistical arm of the U.S. Department of Energy said, ” “Concerns about extreme climate along with rising prices in the petroleum market could maintain up pressure to the Henry Hub spot price throughout a lot of the prediction interval” The analysis described that “electrical power requirement for natural gas increases throughout the summer cooling system.”

By the next quarter that the EIA anticipates, “The tendency will accelerate throughout the elevation of this cooling year” The others of 2007 bodes well known for CBM and organic gas shareholders because location costs are again prediction to commence a more “rise toward a winter summit.”

The National Oceanic and Atmospheric Administration projection for heating and heating degree days indicates that an increase of 8.4 per cent greater home usage of propane through the summer 2007. In accordance with the EIA, there is likely to soon be 11 per cent more ‘gas –underfloor heating degree days’ that summer.

About March 30th, natural gas storage rates stood at 127

below the corresponding level one year ago. This past year’s storage excess clobbered lots of those CBM hopefuls in late spring and again throughout summer time. This past year, the storage narrative has begun to undo. This weekend bad weather can bring about still another draw down, also CBM company shares might jump somewhat bigger — as had been seen at mid winter.

In late January, BP establish the pace to get revived interest in coal bed methane (CBM) by declaring it planned to get $2.4 billion within the next 1-3 years to maximize its share of eventual recovery of coal bed methane gas from the San Juan Basin with approximately 1.9 billion cubic feet. BP spokesman Tony Hayward said, “This investment will enable us to keep on the responsible development of a few of the biggest gas fields within the US.”

It’s very possible that the unconventional gas businesses could turnaround throughout the EIA-predicted bolstering in natural gas prices. For that reason, we’re more and more closely tracking improvements in previously featured organizations with non-conventional petrol resources.

Calgary-based EnCana (ECA) will be the market pioneer in unconventional all-natural gas and integral oilsands development.

Denver-based Delta Petroleum Corporation (DPTR) participates in pursuit, and the acquisition, creation, and production of both natural gas and crude petroleum. What some believe may develop into a company-maker could be that the Columbia River Basin in southern Washington. Delta has just divested non-core possessions to narrow the corporation attention. Gulf Coast is all about traditional petroleum and petrol, as the Rocky Mountain attention is about non-conventional tight gas sands.

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