U.S. Gas Supply Cut of 5% Would Push Price to $4, Barclays Says
February 08, 2012, 4:57 PM ESTBy Ann Koh
Feb. 8 (Bloomberg) -- U.S. natural gas supply would need to fall by 5 percent for prices to climb to $4 per million British thermal units, according to Barclays Plc.
Suppliers will have to reduce gas flows by an average 3.2 billion cubic feet a day to push prices 31 percent higher than its 2012 forecast, Shiyang Wang and Michael Zenker, New York- based analysts, wrote in a report dated yesterday. Producers currently have announced supply cuts amounting to just 1 percent of output, according to the bank.
“The boost to a typical producer’s cash flow would more than make up for the lost revenue from a lower level of production,” according to the report. “This asymmetrical reward has always been available but perhaps has never been so tempting as in the current glutted market.”
Barclays cut its 2012 price forecast for U.S. natural gas to $3.05 per million Btu on Jan. 30, citing rising temperatures and storage supplies that are higher than 2011 levels. That was down from the bank’s previous estimate of $3.80.
--Editors: Christian Schmollinger, Alexander Kwiatkowski
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
