MTECHTIPS

MTECHTIPS:-Barclays: Q4, 2012 marks the reset in Natural Gas prices at $3.35/MMBtu

According to investment bank Barclays, Q4, 2012 marks the reset of the natural gas markets, as storage anxiety disappears.“We have revised our Q4 12 price forecast from $3/MMBtu to $3.35, mainly to reflect the higher-than expected reduction of the storage overhang during the summer.” the Bank said in a report.Meanwhile natural gas producers continued to add to hedges for both this year and next year in Q3 despite anemic Q3-Q4 2012 prices and calendar 2013 prices Producers are just as well hedged for 2013 this year as they were for 2012 last year, the Bank said.“Despite being well-hedged, producers are unlikely to shift back to drilling gas next year as the promises to investors to shift to oil and liquids instead would be very difficult to reverse, in our view.” report added.“We believe the following year calendar prices need to reach $4-4.50 for some producers to shift back to drilling gas again.” the Bank said. “We believe Q4 12 and calendar 2013 prices compared to where the forward curve is at the moment have much more downside than upside, therefore producers might have limited windows of opportunity to hedge further”, report continued to say.