New York – Many experts seem to agree that there is nowhere for natural gas prices to go but up, according to speakers at a recent industry conference.

The problem, of course, is knowing exactly when natural gas tags might turn skyward – and assuming they do, knowing how far and how fast they might rise.

Of course, Perspectives doesn't recall anyone predicting $3 to $4 mmBtu gas this time last year. So, we also give lots of credence to folks out there who claim there is no reason for prices to surge in the near term.

Take Tom Saal, senior vice president-energy trading, at Hencorp Becstone Futures LC, Miami, Fla., who thinks the current natural gas market is "irrational" and oversold.

As the old adage goes, the cure for low prices is low prices and the cure for high prices is high prices, he said. "I did a lot of studying to learn that," he quipped.

Saal compared the current natural gas market to someone trying to hold a basketball under water. The longer you try to hold it underwater, the harder it becomes to keep it there.

"We've pushed that basketball down for quite a while," he said. "And when she goes, she's going to go."

The real question might not be how long the basketball stays submerged but how high it will jump out of the water, he said. (During a question-and-answer session after his talk, he joked that the only person who really knows when the basketball will jump is named "Lucky.")

Markets are often irrational. And trader behavior doesn't necessarily reflect market fundamentals, Saal opined. To cut through the irrational fuzz of human action, he presented several charts (a committed chartist, that Tom.) Saal's charts showed that while $4.60 per mmBtu natural gas is high by historical standards, the price of natural gas has shot up when it crosses that $4.60 threshold since about 2000.

In short, $4.60 mmBtu might be a number to keep an eye on because it could well mark the release of the proverbial basketball. "You need to have your hedge program in place, and get ready to take action, because if the market starts to move away from you… you're going to have to chase it, because it may not give you a second chance above $4.60 (mmBtu)," he warned.

That means buyers right now have a "golden opportunity" to lock in prices for a long time, Saal opined.

Paul Corby, senior vice president at Planalytics Inc., Wayne, Pa., didn't pick an exact price but did forecast a time for recovery.

Gross domestic product for the first quarter may have "sucked," but Corby thinks it also marked the bottom. And that means it's time to buy natural gas now.

"It ain't going to come back down to $2.50 (mmBtu) or $3.00 (mmBtu) ," he said.

Planalytics also forecasts hurricanes every December and boasts of roughly predicting Hurricane Dennis in 2005 as well as Hurricanes Gustav and Ike in 2008.

For 2009, the company expects a storm to roar into the Gulf of Mexico between Aug. 10 and 22. "Obviously, if we get hurricanes this year in the Gulf of Mexico it's going to make prices spike," he said.

But others aren't so sure natural gas prices will turn around so soon. Count among them Ron Norman, a member of the management group of PA Consulting Group, Cambridge, Mass.

The rig count may be down by more than 50 percent, but the market remains oversupplied, he said. Complicating matters, increased liquefied natural gas imports (LNG) into the United States will likely lead to an oversupply situation for the next year or two, Norman said.

Much of that LNG capacity had been expected to be "sucked up" in European or Asian markets last year. But with messy global economic conditions, there is a good chance a lot of that LNG will end up in the United States, Norman said.

"The U.S. is the market of last resort. It is the largest market. We've got the storage," he explained. "I expect that some of that excess is going to wind up coming here whether we need it or not."

And the U.S. likely doesn't need it because of its own increased gas production capacity. On the heels of that new production, the country built roughly 4,000 miles of new pipelines in 2008, and about that much will be built in 2009, Norman said. That "massive infrastructure investment" is three times the average of 2007 and probably three times the average of the last decade, he said.

"In a sense we do not need (imported LNG), but I think in the near term, at least, we are going to get it anyway," he said.

Still, by 2012, there should be increased U.S. demand, which should gobble up what had previously been excess supply. "And then it gets to be a real question as to whether or not we overshoot going one way or the other," Norman said. "I don't ever expect the market to be in balance for very long."

Longer term, unconventional gas will replace declines in conventional gas plays, he added. That may not be news now, but it would have been a few years ago when LNG was seen as the "savior" for the "massive supply gap" in natural gas that many analysts expected.

Still, Norman is not exactly comfortable with today's givens. "The conventional wisdom of a couple years ago has certainly proven to be largely mistaken. I fear that the conventional wisdom of today may also prove to be largely mistaken," Norman said. "There certainly will be a lot of gas sloshing around, and there will be a lot of competition, particularly in the U.S."

But let's not leave all the forecasting fun to the experts…

In an informal poll of the audience members at the GasMart 2009 conference in Chicago, roughly half of the audience raised their hands when asked if they thought gas tags would climb. The other half put their hands in the air for falling prices.

In short, it's a horse race. And may the best analyst win.

Why don't you give it a shot? Flip a coin. Let us know the results. If you're right, you can charge a consultant fee. (And if you're wrong, maybe you can put together an elegant analysis of you errors and still charge one.)

reprinted with permission from American Metal Market.