Natural gas prices surged another seven per cent Wednesday as more big gas producers announced plans to cut back output — continuing a surge that began late last week.
The February futures contract in New York jumped 17 cents to settle at $2.73 US per thousand cubic feet, bouncing off 10-year lows set earlier this month.
In the last four trading sessions, gas prices have risen 18 per cent.
Shares of big natural gas producers jumped in kind. Stock in EnCana, Canada's largest gas producer, rose almost 10 per cent Wednesday to close at $20.75 on the TSX. The shares are still far below their 52-week high of $34.25.
ConocoPhillips became the latest company to announce plans to idle some of its natural gas wells until prices improve. Chief financial officer Jeff Sheets told Bloomberg Wednesday the company would shut about 100 million cubic feet of daily gas production this quarter in Canada and the U.S. That's about four per cent of its production.
Occidental Petroleum also said it would cut back on its drilling for gas because of the low prices.
Another big American gas producer, Chesapeake Energy, announced Monday it would curtail 500 million cubic feet a day of gas production. That's about eight per cent of its daily output.
Gas prices have plunged in recent years as supplies grew faster than demand — a result of a huge increase in drilling for shale gas.
Simply put, companies have become so proficient at extracting gas from underground shale layers that U.S. stockpiles have grown to near record levels. So far, supplies in storage are running about 20 per cent higher than normal for this time of year.
The latest weekly U.S. natural gas inventory data will be released Thursday morning.
This year's exceptionally mild winter in most areas of North America has also pressured gas prices. But forecasts within the past few days have suggested cooler winter temperatures are in store in many big gas-consuming areas, helping to support the recent price rise.
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