New York (Platts)--14Jan2008

Analysts are not reaching consensus on the US natural gas storage picture
this season, with some predicting a higher-price trend this winter, while
others are picking up more bearish signals.

Credit Suisse analyst Teri Viswanath said Monday that, despite record
amounts of gas in storage at the beginning of the heating season, core demand
for gas "has been much heavier than expected, fueling speculation that the
market will be less prepared to build summer stocks" and should therefore lead
to gas prices trending higher, averaging about $7.49/MMBtu in 2008.

But analysts with Raymond James and Associates said Monday that
temperature comparisons with 2007 are poised to "turn much more difficult,"
since the year-ago period featured 10% colder-than-normal temperatures across
much of the US from mid-January through early March.

"Given the short-term weather forecasts, it looks as if repeating, let
alone surpassing, such cold weather may be a tough task to accomplish," the
analysts said.

Thus, the tighter gas storage seen during the last few weeks "is likely
to reverse course, taking natural gas prices back down as the historical
correlation between year-over-year storage differential and prices hold."

Viswanath predicted that gas storage levels should reach April 1 at about
1.439 Tcf, marking a 164-Bcf deficit to 2007 and a 253-Bcf deficit to 2006.

"With more than half the season still weighing in the balance, it might
seem irresponsible to forecast a writedown of another [1.3 Tcf] in
inventories," the analyst wrote. "However, the pace of storage withdrawals for
the winter of 2007/2008 has easily eclipsed the previous three seasons."

Thus far, storage withdrawals this season have totaled nearly 800 Bcf;
"this far surpasses the corresponding three-year average of 552" Bcf,
Viswanath said. "It's little wonder that the market has taken notice of these
changes in light of the heavy withdrawals likely to materialize over the next
two weeks."

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