New York (Platts)--21Apr2008

Record-high oil prices are likely to keep a strong level of support
underneath natural gas prices this summer, according to a new report by the
consultant Strategic Energy and Economic Research.
Natural gas prices at the Henry Hub could average around $10.20/MMBtu
during this year's non-heating season--48% above where there were over the
same period last year--assuming the number of cooling degree-days this summer
is 5% above-normal, an "average" recession and no significant supply
disruptions by hurricanes, SEER predicted.
"Natural gas prices are still low relative to their historic relationship
with oil," Ron Denhardt, SEER's vice president of natural gas services, said.
Though Henry Hub prices typically have averaged above the price of 1%
residual fuel oil at New York Harbor, the price of 1% resid currently is
holding above $12/MMBtu while gas prices are holding below $11/MMBtu, he said.
At the same time, however, downside risks remain in the possibility of a
mild summer across much of the US, a stronger dollar, and weak economic growth
triggering "a deeper recession than projected by most," Denhardt said.
Moreover, though gas prices are weak relative to crude, their strength
compared to with historic prices over the last two years could trigger "a very
strong demand response" in terms of consumers curtailing their consumption, he
said.