Own Santos shares? This analyst expects gas prices to grow through to 2025

a gas worker with hard hat and high visibility vest stands cross armed and smiling in front of an elaborate steel structured gas plant.a gas worker with hard hat and high visibility vest stands cross armed and smiling in front of an elaborate steel structured gas plant.

One analyst is predicting gas prices to rise in the future, so could this be beneficial to gas producers like Santos Ltd (ASX: STO)?

Santos shares are up 3.18% today, currently trading at $7.61. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) is 3.65% higher at the time of writing.

Let’s take a look at the outlook for gas prices.

Gas prices to rise: UBS

UBS analysts have predicted east coast gas contract prices will rise 10% a year up to 2025, according to a Thomson Reuters report cited by NAB trade.

Brokers attributed their forecast to a lack of supply as coal-fired plants in Australia shut down.

The UBS analysts were quoted as saying: “While it may take some time for electricity prices to normalise, we expect the role of gas-fired power generation to lift as coal continues to exit the market.”

Santos generated $281 million in sales revenue from domestic sales of gas and ethane in the first quarter of 2022. Liquefied natural gas sales contributed a further $1.1 billion in sales revenue for the company, while liquefied petroleum gas sales generated $40 million.

Today’s share market gains

Santos is among multiple ASX 200 energy shares rising today as oil supply concerns weigh on the market.

Oil-producing nations Ecuador and Libya are facing disruptions due to political upheaval. At the same time, Group of Seven (G7) countries are discussing possibly placing a cap on the price of Russian oil to show support for Ukraine, Reuters reported.

However, oil consultant Andrew Lipow told the publication this would be difficult to implement given “China and India have become Russia’s biggest customers”.

At the time of writing, Brent Crude Oil prices are up 1.58% to US$116.67 a barrel, while WTI Crude Oil prices are 1.28% higher to US$110.85 a barrel, Bloomberg Energy figures show.

Santos share price snapshot

The Santos share price has climbed 5% in the past 12 months. However, in the year to date, it has gained nearly 21%.

In comparison, S&P/ASX 200 Index (ASX: XJO) has lost around 8% in the past year.

Santos has a market capitalisation of about $25.7 billion based on the current share price.

The post Own Santos shares? This analyst expects gas prices to grow through to 2025 appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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