Outlook 2008: US gas reserves keep rising as production and demand level off ///

Natural gas prices rose steeply last year, and that won’t be the end of it. Look for more of the same this year, at least until the players figure out why demand isn’t keeping pace, and what they can do about it. The best guess at this point is for $7-plus/MMBtu at Henry Hub, with some random pushes into $8 territory. Everything costs more these days, and that includes the cost of moving gas from the wellhead to the burner tip. We have a free-market system, and price movement goes with the territory. Lately it’s all been up, and higher prices to end users are not conducive to building demand. US imports from Canada will likely fall if for no other reason than increases in home-grown Canadian demand, which will have to come first, especially in light of falling domestic production there.

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