U.S. Gas Prices May Rise on Asian Demand

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We believe U.S. natural gas prices will likely remain in the $12.70-to-$13.20 per million British thermal units range, in line with international prices,'' Goldman's analysts, Samantha Dart and Jeffrey Currie, said in their report to Bloomberg today." However the observed tightness in the LNG market suggests that risks to our price forecasts remain skewed to the upside.''

U.S. natural gas prices, which have surged 78 percent this year, may extend gains because of competing demand for liquefied natural gas from Asia and Europe, Goldman Sachs Group Inc. said.

LNG consumption in Asia and Europe may increase on stronger economic growth, emission costs and surging prices of alternate fuels such as oil and coal, the investment bank said in a June 18 report. Goldman cut its estimates for U.S. demand for 2008 by 13 percent to 1.54 billion cubic feet a day (12 million metric tons a year).

"We believe U.S. natural gas prices will likely remain in the $12.70-to-$13.20 per million British thermal units range, in line with international prices,'' Goldman's analysts, Samantha Dart and Jeffrey Currie, said in the report e-mailed to Bloomberg today." However the observed tightness in the LNG market suggests that risks to our price forecasts remain skewed to the upside.''

LNG demand is set to increase by 10 percent a year through 2015, more than five times estimated gains in crude oil, as power producers switch to cleaner fuels, according to Citigroup Inc. Asian purchases of LNG have risen after Tokyo Electric Power Co. shut its Kashiwazaki Kariwa nuclear plant since July 2007 because of earthquake damages.

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