United States Natural Gas Fund, LP (UNG)

ww2004 (< 20) Submitted: 9/25/08 11:56 AM : Start Price: $34.98 UNG Score: 0.91

With natural gas prices falling so far so fast from the high this summer, producers will shut down marginally profitable areas until prices rise again. CHK has already started curtailing production and cutting their rig count. As existing wells deplete and cease production, new wells will not be brought on fast enough to compensate.

In addition, the credit crisis is likely to slow development of new projects through capital restrictions. It is taking a greater and greater amount of new development to maintain production levels in North America so this doesn't bode well for supply keeping up with demand.

Even with the slowing economy, I believe production declines will be larger than declines in demand. This will mark the bottom of natural gas prices.

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