U.S. natural gas price forecasters are having their worst year on record as producers boosted output amid the mildest winter in 12 years.
The CHART OF THE DAY shows strategists tracked by Bloomberg cut their 2012 price predictions by an average of 26 percent in the first quarter, the most since Bloomberg began collecting the data in 2008. Next-month gas dropped 29 percent in the first quarter on the New York Mercantile Exchange.
Marketed gas production will increase 4.5 percent this year to average 69.22 billion cubic feet a day from an all-time high last year, the Energy Department said April 10. Last winter was the warmest since 2000 in the contiguous U.S., according to the National Climatic Data Center. Gas reached a 10-year low of $1.902 per million British thermal units on April 19 after stockpiles ended the previous week at 2.512 trillion cubic feet, a record for that time of year.
“It’s been pretty obvious for several years that we’ve been heading in this direction,” J. Marshall Adkins, an energy analyst at Raymond James & Associates Inc. in Houston, said yesterday in a telephone interview. “The weather exacerbated the problem but when gas supply is up 8 to 10 percent year-on-year you’re going to have a problem.”
Gas will average $2.50 per million Btu this year, according to Adkins. That compares with a median of $2.75 from 26 analyst predictions compiled by Bloomberg. At the beginning of the year, the consensus was for $4.40.
Goldman Sachs Group Inc., the fifth-largest U.S. bank by assets, on April 11 lowered its 2012 estimate to $2.40 per million British thermal units from $3.10. Commerzbank AG cut its forecast to $2.25 from $3.25 on April 24. Morgan Stanley in January cut its 2012 forecast by 30 percent to $2.70.