Bank of America Corp. raised its forecast for U.S. natural gas prices in 2013 after the biggest drawdown from storage in a decade left inventories below the five-year average.
Natural gas will trade at an average $3.90 per million British thermal units, Sabine Schels, an analyst at the bank in London, said in an e-mailed report dated yesterday, raising her prediction from $3.75. Prices will drop to $3.50 this summer, she said. The bank maintained its 2014 forecast at $4.20. Month- ahead gas rose 25 percent this year to trade at $4.19 per million Btu at 6:28 a.m. on the New York Mercantile Exchange.
The use of gas in power generation in place of coal is still needed to support prices as inventories are at the fourth- highest level on record for the time of year, Schels said.
“A key risk stems from reversing coal-to-gas switching in power generation too sharply as some coal substitution is still required to balance the market,” she said. “Coal substitution remains an important price driver this summer.”
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