Short-Term Price Outlook is Good

The short-term outlook for natural gas prices is good, but price volatility seems to be a permanent feature of the market and down turns in prices will likely be shallow, according to John Righeimer, with Maverick Energy, who spoke recently at a meeting of commercial and industrial customers sponsored by Citizens Gas.

Warmer than normal weather last winter and no hurricane damage to production facilities the past two years has produced stable natural gas prices in 2007. However, Righeimer warned that flat natural gas production in the U.S. and continuing upswing in natural gas demand will likely produce the following market trends:

• Ongoing natural gas price volatility.
• Downturns in prices will be shallow because geopolitical and market fundamentals favor continued high prices.
• Mild weather in summer and winter will produce soft prices.
• High storage levels are likely unless extreme cold or hurricane damage to production facilities occur.
• Fear premium from hurricanes and geopolitical forces will continue impacting the market.

In the short-term Righeimer recommends natural gas end-users do the following to manage risk:

• Encourage/hope natural gas storage levels stay full.
• Promote energy efficiency and conservation in your organization.
• Encourage price risk management (hedging).

NAPE 2007-2008 Winter Natural Gas & Forecast Market Overview

About Maverick Energy -- Maverick Energy Consulting was founded in 2000 with the purpose to consult and train natural gas utilities and large commercial/industrial end-users.  Since our inception, we have evolved into a consulting firm that helps customers implement price risk management strategies for natural gas, diesel fuel, unleaded gasoline and electricity. More information is available at www.maverickec.com.