Oil and Gas Price Forecast

With oil and gas prices in free fall, economists are scurying to revise their predictions for 2009 and 2010. The Nymex crude future price was $77.70/B and Nymex Henry Hub future natural gas price was $6.54/MMBtu on October 10th.

We have examined the latest forecast from the Energy Information Administration and offer our view of future prices.

Previously, we have shown the how international crises impact prices. This is illustrated in the following graph.


Our analysis suggests that prices could reach $35/B if they return to the estimated oil price line. It is unlikely that we will see such a drop, because of the continuation of the war in Iraq, heighten tensions in Parkistan and Afghanistan, and some output reductions by OPEC.

This would suggest prices in the range of $45 to $50/B might be realized. The corresponding natural gas prices would be $4- $5/MMBtu area depending on weather conditions.