AP
Forecasts: no end in sight for natural gas glut

Tuesday, August 18, 2009

HOUSTON - Massive natural-gas inventories will keep downward pressure on prices in the coming months, and not even a major hurricane in the Gulf of Mexico would likely change that, according to two new forecasts.

In a new report for its clients, Bentek Energy says natural-gas in storage is likely to reach a record near 4 trillion cubic feet by the end of November.

As of Aug. 7, U.S. storage amounted to 3.152 trillion cubic feet, 23.1 percent above year-ago levels and 19.6 percent higher than the five-year average, the Energy Information Administration reported Thursday.

The main culprit is the recession, which has hammered energy demand and contributed to huge inventories of natural gas, oil and gasoline.

Bentek, which tracks natural gas production and shipments, said weather is likely to have the biggest impact on gas markets.

"A sequence of severe weather events - possibly including extended late-summer heat, major Gulf hurricanes and a cold winter - would temporarily reverse the current oversupply trend," Bentek says in its report. "However, over the longer term, production efficiency gains ensure quicker supply responses to rising prices."

Bentek said it has seen an increase in industrial demand for natural gas since July, "but even a fast recovery would have a relatively minor impact on prices."

The suburban Denver-based company says large supplies of natural gas should keep prices below $3.50 through October.

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