Investing.com - Natural gas prices rebounded on Monday, after Chesapeake Energy Corporation, the second largest U.S. producer, said it planned to reduce production levels in response to prices falling below "economically unattractive levels".
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.471 per million British thermal units during early U.S. trade, jumping 3.32%.
It earlier climbed more that 5% to hit a session high of USD2.620 per million BTU.
Chesapeake, which produces approximately 9% of U.S. natural gas said it will “immediately curtail” 8% of production and said it would cut its activity in regions which produce only gas in half by the second quarter.
The cuts mean that the company will produce the same or slightly less natural gas in 2012 than it did last year.
Natural gas futures slipped to USD2.32 per million BTU last week, their lowest level since 2002, before easing up to USD2.34 on Friday.
The cutbacks in production are designed to reduce a supply glut in the country, brought about partially by this winter’s milder weather, particularly in the Northeast and Upper Midwest, which has hit demand for gas-fired heating.
Gas storage levels have also been driven by increased shale gas production, in which millions of gallons of sand and water combined with chemicals are forced into compact rock to create cracks that serve as escape routes for the gas.
In a report last week, the Energy Information Administration said storage levels of the fuel are 21% higher than their five-year average for this time of year.
Despite the rebound in gas prices demand looks likely to remain weak, with weather conditions expected to remain mild until the end of February.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March were up 0.97% to trade at USD99.25 a barrel.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.471 per million British thermal units during early U.S. trade, jumping 3.32%.
It earlier climbed more that 5% to hit a session high of USD2.620 per million BTU.
Chesapeake, which produces approximately 9% of U.S. natural gas said it will “immediately curtail” 8% of production and said it would cut its activity in regions which produce only gas in half by the second quarter.
The cuts mean that the company will produce the same or slightly less natural gas in 2012 than it did last year.
Natural gas futures slipped to USD2.32 per million BTU last week, their lowest level since 2002, before easing up to USD2.34 on Friday.
The cutbacks in production are designed to reduce a supply glut in the country, brought about partially by this winter’s milder weather, particularly in the Northeast and Upper Midwest, which has hit demand for gas-fired heating.
Gas storage levels have also been driven by increased shale gas production, in which millions of gallons of sand and water combined with chemicals are forced into compact rock to create cracks that serve as escape routes for the gas.
In a report last week, the Energy Information Administration said storage levels of the fuel are 21% higher than their five-year average for this time of year.
Despite the rebound in gas prices demand looks likely to remain weak, with weather conditions expected to remain mild until the end of February.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March were up 0.97% to trade at USD99.25 a barrel.