Natural Gas - RJ's Price Forecast

[dan_s]

From Raymond James 4/30/2018:

Recently, U.S. natural gas inventories reached the lowest level since 2014. Does that mean it's time to get bullish on gas prices? No! In conjunction with our upwardly revised oil price forecast update, we are also lowering our gas price forecast for 2019 and long-term. The backdrop for our incremental bearishness is the U.S. gas market's increasingly ''inverse'' relationship with oil prices. As higher oil prices spur growth in oil production, they also drive an increasing supply of associated gas. Put simply, the better things get for oil prices, the worse the read-through for gas prices. Interestingly, our lower expectations for future gas prices is despite very strong U.S. natural gas demand growth.

Although project delays are affecting some near-term gas demand from LNG and Mexican exports, the fact remains U.S. gas demand growth is very stout from: 1) coal to gas switching, 2) petro-chem expansions, 3) LNG exports, and 4) Mexican exports. The bottom line is that we are maintaining our 2018 U.S. gas price forecast of $2.75/Mcf, but lowering 2019 from $2.75 to $2.25. Longer-term, we now think $2.50 in more reasonable than $2.75.
_____________________
My Take is that we see a short lived spike in ngas price this summer. How high depends on how HOT the summer gets.