Metal Bulletin
US energy tubulars eye price pickup after near-term dip

Monday, June 11, 2012

Energy tubular prices might be poised for a near-term dip as shale gas drilling declines, but gas exports and a switch to natural gas vehicles could bolster prices in the longer term, according to some energy industry experts.

"Natural gas . . . is ultimately a weather game," meaning its fate depends on how cold the winter is or how hot the summer might be, Jack Weixel, director of client services at Evergreen, Colo.-based Bentek Energy.

A big gas glut in 2006 took roughly two years to work down, he said, but noted that another glut in 2009 took only six weeks to burn though after a particularly cold winter in 2010.

"The variable really is the weather. . . . So it's going to take a whole heck of a lot of weather, but not necessarily two years to work this excess down," Weixel said, also questioning what impact gas exports would have on prices.

The United States might become a net exporter of natural gas by 2016-17, he said, but it would have to compete against other big natural gas exporters such as Qatar, Russia and Australia. That and other factors mean natural gas prices will remain in the vicinity of about $3.50 per mmBtu through 2017, he added.

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