Natural gas futures surged 8 percent after Conoco Phillips said Wednesday its shutting down 100 million cubic feet per day (0.1 bcf) of production in 2012 due to lower prices.
It's a smaller shut-in than the half-a-billion cubic feet per day of natural gas Chesapeake Energy announced Monday that it is putting into place.
Occidental Petroleum also said Wednesday that it is cutting back on pure gas drilling in the mid-continent and South Texas due to "horrible" natural gas prices.
These events have been catalysts for a short-covering rally that's caused natural gas prices to spike more than 50 cents in three days.
"Producers are taking measures to limit production levels that have driven natural gas prices to near decade lows this month," says Eugene McGillian, analyst and broker at Tradition Energy. "The fact that additional producers are coming out with these announcements is fueling the rise."
February NYMEX natural gas futures, which expire on Friday, rose to an intraday high of $2.776 per million BTUs Wednesday morning up from a $2.24 early Monday morning. Barclays Capital says a closing price for front-month natural gas futures above $2.62 on Wednesday would signal further upside toward $2.93 before showing signs of a top.Page 1 of 2 | Next Page