Ahead Of The Bell: Natural Gas

NEW YORK (AP) — High natural gas storage levels and weakness in demand led an analyst Tuesday to cut his outlook for natural gas prices and lower his ratings on producers Chesapeake Energy Corp. and Devon Energy Corp.

Credit Suisse analyst Jonathan Wolff lowered his 2009 natural gas price estimate to $4.09 per million British thermal units (mmbtu), compared with an earlier outlook of $4.37 per mmbtu. For 2010, he cut his forecast to $5.75 per mmbtu from $6.50 per mmbtu.

Wolf reduced his long-term outlook to $7 per mmbtu from $8 per mmbtu.

Benchmark natural gas prices settled at $3.06 per mmbtu on Monday.

Wolff said markets will remain soft for the rest of the year due to a glut of natural gas in storage, a recent flip in economics that favors coal over gas and an imbalance between gas supply and demand.

Last week, the Energy Department's Energy Information Administration said natural gas inventories rose to 3.59 trillion cubic feet, the highest level ever on record.