Wednesday, April 7, 2010

EIA 2010 Gas Price Estimate: $4.44/MMBtu

Yesterday, the Energy Information Agency published its short term energy outlook.  From my perspective, the most interesting infonugget was that the EIA significantly decreased its estimate of the 2010 average gas price from $5.17 to $4.44/MMBtu.  The price estimate for 2011 is $5.33/MMBtu. 

As I've stated in the past, I don't put a lot of stock in the EIA's prediction for future commodity prices (if someone had that gift, I'll bet they wouldn't be working for the federal government; but people who do claim to have the gift and make the big bucks on Wall Street fare little better in the prediction game), but the magnitude of the adjustment is fairly alarming.  I'm not sure how the revised production data expected at the end of this month impact this price adjustment, but it doesn't bode well for gas fans.

Interestingly, the people who ARE paid the big bucks to prognosticate on the topic of price, like analysts at investment bank Tudor Pickering & Holt, also dropped their estimate of 2010 natural gas price about a month ago.  TPH lowered its estimate of 2010 natural gas prices from $7.50 to $6.20, with a long-term estimate of $6.50.  That's quite a big difference from $4.44.  I wonder who will be right.  Other estimates are all over the board.

1 comment:

wfran15 said...

The EIA's STEO is the biggest guessing game out there. Their price estimates have been remarkably unaccurate and I wouldn't trust any price predictions that this monthly report comes up with for the life of me. I know market speculation is often a crap shoot, but when you put some government beaucrats making up where they think prices are going, you get even more flawed data than an energy trader who actually has some skin in the game. The only thing the STEO actually helps people with is supply and demand forecasts, not prices though.