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Gas producer EQT (EQT) is shutting down production in the Huron natural gas basin. Couple this with a recent statement from T. Boone Pickens that natural gas (UNG) is heading to a $1 handle and it is no surprise the brakes are coming down.

EQT

Now Chesapeake (CHK), one of the largest natural gas drillers, is announcing it will shut down 50% of its natural gas production and pull about 9% of the nation's natural gas supply off the market. If conditions continue, Chesapeake says it is prepared to double the reduction of production as much as 1.0 billion cubic feet per day.

This appears to be the start of something bigger as supply grossly outweighs demand for natural gas.

CHK

Both EQT and Chesapeake shares were up by 8% in today’s trading and many of the E&P stocks associated with natural gas drilling are also moving higher.

Traders should also note the production shutdowns from EQT and Chesapeake include wells in the Appalachia region where drilling is most economic for drillers, reflecting the easy and cheap production.

Traders may want to keep an eye for other Integrated oil and gas companies like Exxon Mobil (XOM), which acquired XTO Energy for its natural gas wells and distribution for signs of reducing production, especially in the areas where its requires a higher natural gas price to be profitable.

XOM

Traders also may want to ask themselves these two questions: “if natural gas is so low, why my heating bill cost not heading lower? Which stocks are profiting from low natural gas prices?”

Americans do not need to look far from their own stove or gas furnace for the answer as any natural gas-powered electric company and natural gas provider should be making money hand over fist.

We will look into a couple of possibilities soon.

Source: A $1 Handle For Natural Gas?