Recent prices for natural gas have strengthened but it hasn’t occurred in a vacuum. World oil prices have led the way on expectations of global economic improvements in late 2009 and 2010. An overall review of current U.S. gas supply shows a curve that is beginning to indicate a downward trend; however, most of the change has come in the form of import reductions from Canada. Domestic production declines will happen as time passes given reductions in drilling activity and budgets – that is a fact.
What is unknown is how rapidly the large volume market for industrial consumption of natural gas will rebound. With that said, many analysts believe that the market price for natural gas still has room at the bottom to fall given high storage inventories, lackluster demand and a relatively strong supply position compared to potential summer demand.
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