Low prices are the cure to low natural gas prices

Henry Hub prices have collapsed and are approaching $2/mmbtu after nearing double digits just last fall. A large storage deficit due to previously muted supply and demand responses to higher prices have turned upside down in a hurry. A mild winter weather, record US gas production and the extended Freeport LNG outage have now resulted in a sizable storage surplus. A demand response is already occurring from higher gas-fired power generation at low gas prices. However, a supply response is also necessary to avoid US gas storage containment this summer injection season and in 2024. In this insight, we explore the following key questions: _Operators are slowing down drilling activity in the Haynesville and Northeast, will more be needed? -Will the forward curve’s steep price contango promote deferred well completions until higher prices arise? -How low do prices need to go for operators to instigate wellhead economic shut-ins?