GAS PRICES TO REBOUND IN '92, INDUSTRY ASSOCIATION PREDICTS

GAS PRICES TO REBOUND IN '92, INDUSTRY ASSOCIATION PREDICTS

The American Gas Association said it expects natural gas prices to recover somewhat in 1992, with wellhead prices averaging $1.60 a million cubic feet, up from the $1.50 averaged in 1991.

However, the association cautioned Wednesday that it based its $1.60 forecast on two assumptions: that temperatures in the United States will return to normal levels, and that the U.S. economy will come out of the recession that cut demand in 1991."Our 1992 forecast has prices going back to levels of 1990, when they were about $1.60 a million Btu (British thermal units)," said Michael German, senior vice president of the AGA, which is a trade group representing natural gas utilities and pipelines.

AGA officials announced the price forecast in a presentation to about 250 Wall Street bankers and financial analysts.

But several industry analysts interviewed after the meeting said they were skeptical about the AGA's price forecast.

"If you do a 12-month forward average based on the futures market, the forecast for wellhead prices in 1992 is $1.27" per million Btu, one industry analyst said.

Regarding supply, analysts said natural gas inventories continue to be more than adequate. As for demand, they said the U.S. economy would need to come out of recession very soon, and temperatures would need to run below normal for most of the year, in order to bring 1992 gas prices to an average of $1.60.

"You would need the economy to accelerate very quickly," said another analyst. "And even if the economy did recover, you're talking $1.50, $1.55, maybe."