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NatGas Price Crash Is 'Good News': Energy Analyst

Natural gas traded lower on Tuesday, despite getting a boost from the colder weather. However, prices are up approximately 14 percent over the last month. What should we expect from this volatile commodity in 2010? Arthur Gelber, president of Gelber & Associates, and Jim Osten, energy analyst at IHS Global Insight, shared their views.

Time to Buy Nat Gas?

“Shale gas is bringing plenty of new supplies to the market…at this point in time when the economy is growing but industrial consumption is down,” Gelber told CNBC.

“So we see that there’s plenty of supply and growing demand, but right now, that’s making the market weak.”

Gelber said 2010 will be a good year for natural gas and expects an increase in demand.

“Natural gas over the long term can mount a price increase because of increase in demand for things like cars and trucks" and homes, he said, all of which will eventually use natgas.

In the meantime, Osten said there is a “permanent excess” of natural gas, which is a “good thing.”

“Low prices mean low cost, and we have 100 years of gas and gas can play a role in helping the economy grow—but we have really weak economy for 2010 and that’s going to pull down demand,” he said.

Osten expects prices to retract to approximately $4 next year and expects a decrease in demand.

“We had a warm November and 10 of the last 20 years when we had a warm November, nine of those 10 years we’ve had a warm winter. And [the general] fear is that we might have a price crash,” he said.

“Again, that’s good news—it means that we have plenty of gas and costs are coming down and we’ll be able to supply all that efficient clean energy for the future," Osten concluded.

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No immediate information was available for Gelber or Osten.