Nevertheless, our outlook has called for natural gas to remain volatile but range-bound, as spikes toward $3 per million British thermal units (mmBtu) will sow the seeds of their destruction by incentivizing production growth and prompt electric utilities to switch from gas to coal. Conversely, moves below $2 per mmBtu will encourage demand and prompt exploration and production companies to slow their drilling and completion activity.
US natural-gas prices recently tumbled to an all-time low and will likely slip even further in coming months, thanks to elevated storage levels and an unusually warm winter. But these ultra-depressed prices will accelerate decline rates in mature basins, creating opportunities longer-term opportunities for volumetric growth in areas with low production costs.
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