Natural Gas Price Forecast - Feb 26

[dan_s]

Remarks below are from Raymond James new ngas price forecast published at 1:18PM ET on 2-26-2018

Price Deck Commentary: The U.S. Can Produce All the Natural Gas It Needs at $2.75 Long Term. This week’s withdrawal of 124 Bcf
was greater than the consensus estimate of a 121 Bcf withdrawal but lower than our estimate of a 129 Bcf withdrawal. This implies
that the market was 2.7 Bcf/d looser than last year on a weather-adjusted basis and it has averaged 1.4 Bcf/d looser over the past four
weeks. As it relates, total gas in storage now stands at 1,760 Bcf. As pointed out in our most recent natural gas forecast Stat of the
Week, our outlook for 2018, 2019, and long term has trended bearish. Fundamentally speaking, our natural gas outlook is modestly
supported by our expectations for strong natural gas demand and export trends. The key gas demand growth contributors should be:
1) growing Mexican gas exports, 2) increasing LNG exports, 3) strong industrial related demand, and 4) increased coal to gas related
power demand with our lower gas price deck.

Raymond James price deck, which is what I am now using in my forecast/valuation models:
Q1 2018 = $2.90
Q2 2018 = $2.70
Q3 2018 = $2.60
Q4 2018 = $2.80
2019 = $2.75
2020 = $2.75

Turning to the other side of the equation, we anticipate
that a massive U.S. natural gas supply surge of 5+ Bcf/d
will overwhelm demand growth in 2018. The key
sources of this supply growth will be: 1) increased gas
pipeline takeaway from the Marcellus/Utica, 2) growth
in oil driven associated gas supply (largely from the
Permian), and 3) a modest recovery from the resurgent
Haynesville. Given our bullish crude oil deck, the
associated gas component should continue to grow at
an explosive and sustained pace regardless of natural
gas pricing, putting further long-term pressure on
Henry Hub gas prices. This relentless gas supply growth
should be further compounded by growth in
renewables that are increasingly becoming more cost
competitive with gas.

There are some rather bullish comments in the report about NGLs, where petrochemical/industrial demand is strong.
Higher NGL prices are definitely softening the blow of low gas prices for our "gassers".