Natural gas price rises amid supply cuts

NEW YORK - The price of natural gas jumped yesterday after a major producer said it is aggressively cutting production.

Chesapeake Energy told investors its production cuts are "actually higher" than the minimum of 500 million cubic feet per day it announced last month.

Investor relations chief Jeffrey Mobley said at an energy conference in Colorado that the company will push many of its natural gas operations to the sidelines until "what is hopefully a higher gas price environment" in the future.

If prices remain weak, Chesapeake may limit natural gas production by up to a billion cubic feet per day.

Natural gas futures rose by US$0.03, or 1.2 per cent, to finish at US$2.48 per 1,000 cubic feet in New York. Prices surged by more than 5 per cent earlier in the day after Mr Mobley suggested that Chesapeake was increasing the production cuts beyond what was previously announced last month. The company clarified the statement later in the day.

Analysts said yesterday's announcement by Chesapeake shows that energy companies are watching the market closely and will aggressively manage supplies to push prices higher.

"Perhaps this won't be the end," PFGBest analyst Phil Flynn said.

"If prices stay low, maybe they'll drop production even more."

The government reported earlier in the day that natural gas supplies fell last week by 78 billion cubic feet. That was less than analysts expected, and supply levels remain nearly 33 per cent higher than the five-year average. AP

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