Title: Quarterly Natural Gas Watch: A Shortage of Demand
URL(s):

http://www20.cera.com/eprofile?u=35&m=2789;


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NO HELP FROM DEMAND: DIFFICULT TIME IN THE NORTH AMERICAN GAS MARKET

Since January, natural gas prices have fluctuated between $2.00 per MMBtu at
the Henry Hub and $10.00, a result of weather, fuel switching, and increasing
supplies. Loss of demand due to economic weakness is exacerbated by the impact
of the tragedy of September 11. Lower prices have already slowed drilling
activity. Although ample storage levels will guard against last year's peaks,
gas prices will likely to continue to oscillate in the near term.

* The US gas supply rebound expected after record drilling rates is now
unlikely. CERA expects only modest production increases for 2001 and a year-
over-year decline for 2002.

* CERA has analyzed two paths for demand recovery depending on the severity and
length of the economic downturn. Generally, the large overbuild of gas-fired
generating plants and the recovery of industrial demand should cause much of
the lost demand to return in 2002.


**end**

Follow above URL for complete CERA Watch (38 printed pages).

E-mail Category: Watch
CERA Knowledge Area(s): North American Gas


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