NewsOK:

Current low natural gas prices are setting the stage for a dramatic price rebound that should begin this fall or winter, Chesapeake Energy Corp.’s chief executive officer told analysts Tuesday.

"Today’s gas prices are clearly not strong enough to support a North American rig count that is high enough to prevent a very severe and unprecedented decline in North American gas production,” Aubrey K. McClendon said.

"This will set the stage for a dramatic reversal of natural gas prices sometime this fall or winter,” he said.

"How high will gas prices go in the recovery and rebound phase in the next cycle? Obviously, we don’t know. But clearly, gas prices were too high one year ago at $12 to $13 per thousand cubic feet, and today they are far too low at $3.50 per thousand cubic feet,” he said. "So my guess is the rebound will overshoot on the high side, just as it has overshot on the low side.”

My comment: Natural Gas has always been feast or famine. The wells deplete very fast so drilling must be maintained at a high level to compensate for declines which can be as much as 35% a year. The last time the rig count dropped as much as it has recently, natural gas prices rebounded by 86%. I have taken my positions now it is a matter of waiting for the supply to decline until it meets demand.

John Polomny
The Real Deal