Boffilicious

Why the Sudden Run Up in Natural Gas Prices?

Easy!!
UNG in a contango future market - that is where forward prices are higher than spot prices - is a legal ponzi scheme. (Think Madoff without breaking the law!) Thus when UNG rolls from Oct to Nov it sells Oct at say 3.75 ($37,500 per contract) and buys Nov at say 4.75 ($47,500 per contract.)
Because it invests based on net asset value of Gas contracts this means that it is selling about 100,000 Oct contracts equivalent (about 3.75 billion) and only buying 79,000 Nov contracts.
Effectively this means that during the NG roll 21,000 Nat Gas contracts were anticipated to be sold - about 20% of the entire gas market in the front month.
Lo and behold on the Friday before the Sunday when the roll is to start UNG says we are going to issue more shares starting on the 28th. Issuing more shares means buying NG contracts to cover that 21,000 expected to be forced sale.
Issuing more shares (at NAV) means the premium for UNG will disappear (accounting for a 16% drop.)
So the trade on Friday by the insider (probably closely connected) was sell UNG buy NG futures.
This will be reversed on issue of the shares by buying UNG (from the fund) and writing the swap against the futures position. A very nice 17% profit for no risk - thank you very much. And who gets to lose out - why Joe Public whose gonads have already been squeezed extremely hard by the contango - a Contango which allows those with storage access to generate risk free 600% returns (think ex Enron trader John Arnold of Centaurus - they who put the lights out in California!)
Who are the culprits of this latest act of racketeering and obvious market manipulation - well its not difficult to guess: there are only about 3 entities in the world willing and able to write sizable Nat gas swaps AND who have CFTC exemptions allowing them to hold the futures positions over the ICE and NYMEX CFTC imposed limits. Prepare for Class Action!!!!

Natural Gas Production Outlook: Decreases Are in the Offing

I think you are posting the wrong chart: It is the dry production chart that is more appropriate (marketed production less extraction loss) - see:
tonto.eia.doe.gov/dnav...
The figures you are using include gas used in extraction (ie returned to reservoir,) also carbon dioxide, water and non-gas contaminants and so on.
For ten years 1998 - 2008 dry production swung between 1.5 and 1.7 quadrillion cu feet per month declining to 1.5 to 1.6 per month in the years 2004 to 2008 but rising to 1.6 to 1.8 in 2008 to present.
This compares with consumption swinging between 1.5 (summer) and 2.5 (winter). The balance comprising about .25 per month was made up by imports from Canada and of LNG.
www.eia.doe.gov/pub/oi...
Shows this clearly. Whilst I understand your notion of looking at the rate of change of increase however, in a time of collapsing industrial demand and negligible spare storage or pipeline capacity, I think it ludicrous to imply that a slowing increase in production (as more expensive production is closed - hence collapse of rig counts) implies future pressure of shortage of supply.
Strange also that your article makes no mention of Quatar, of Canada, of deep well production... no mention of the collapse of European demand which led to prices at close to zero in the UK. https://theice.com/productguid... no mention of LNG imports/exports and no mention of demand figures.

It really does not really matter if supply is dropping if supply still exceeds demand and there is no storage which is clearly the case.
I recommend this piece in Time which explains it well:
www.time.com/time/busi...

Natural Gas Production Outlook: Decreases Are in the Offing

"natural gas energy comes with smaller carbon and pollution footprints"
That all depends on what is being done with the excess Carbon Dioxide when Nat Gas is extracted dried and scrubbed. Norway sequesters it but as I understand the US does not... big, big difference.

Natural Gas: Extreme Contango Suggests Caution for E&P Companies

The difference between spot and forward is accounted for by the storage monopoly. More gas is being produced than consumed leading to a low spot price compared to forward. Storage is filling up and Henry Hub has very very limited capacity to take NG through its pipeline to allow for delivery. Meantime UNG - the NYSE EFT - whether through direct postions in NYMEX NG or indirect positions through financially linked contracts on ICE exchange or OTC swaps, effectively owns 110,000 contracts of the 160,000 open interest in the Oct NG contract (the one month forward contract.) Its roll ensures the contango is kept high. The contango simply being storage fees paid to Centaurus, Chevron and others with access to NG storage caves. Even if you are bullish that Nat Gas will be higher by next year you cannot buy it at a low price because storers will only sell it you at a high price after they have take an annual 100% storage fee between now and next October or a 600% yield on an annualised basis between Oct and Nov of this year! This is quite simply price gouging.

Misguided Thinking on Natural Gas

I think this proves the point well!!
www.riskcenter.com/sto...

Misguided Thinking on Natural Gas

"they are ambivalent to whether natural gas is expensive or cheap." Yeah but not ambivalent to profits from storage and transportation is a form of storage... right now buying NG spot at $2.5 and sell for Nov at $3.75 provides annualized yield of staggering 600%. Hence whilst UNG will likely lose 40% of its contracts to Roll Yield Loss over the coming 4 months (declining from 107,000 equivalent NG front month to 60,800 equivalent NG front month by January roll if the contango remains), those with access to storage like Chevron, Centaurus and MLP's will flourish.
MW