Chris McGill Natural Gas Market Indicators, Feb. 25, 2009

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Repeating what has been said for many weeks – continued strength in domestic natural gas production relative to last year, a widening surplus of working gas in storage compared to prior years and weak demand fundamentals continue to dominate the short-term natural gas market. Price rationalization in today’s market continues to point down in many analysts view, with the low price outlook supported by the NYMEX forward strip.

However, with everything pointing in one direction one seems invited to look for contrary factors given the recent history of market extremes and volatility. What will buck the trend and when?

Perhaps a colder than normal finish to the winter heating season in key consuming regions; maybe gas production is headed down considering lower rig counts or even shut-ins; maybe LNG doesn’t show up on U.S. shores this year; might there be policy shifts in Washington that change the current momentum; or, might this be a summer of weather-induced supply disruptions or strong cooling-load requirements. Let the guessing begin!

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