UNL - Natural Gas Producers Signal No Intention On Increasing Production (And What This Means For The Natural Gas Market)

• Natural gas producers are soft guiding flat production in 2021.
• This bodes very well for natural gas fundamentals as the deficit of ~5 Bcf/d will persist in 2021.
• Even if this winter proves to be much warmer than normal, the inherent deficit in the market would prevent storage from building back up for the 2021/2022 winter.
• This means that the only way for the US natural gas market to balance itself out will be to cause LNG exports to shut-in again. Depending on global LNG market, this could imply significantly higher Henry Hub prices to force the shut-ins.
• Stay bullish producers as the supply deficit is set to overwhelm the market. In the near term, we are staying on the sidelines awaiting the technical correction and the onslaught of near-term bearish weather trends. We will give an update when we do go back long EQT.

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