Natural gas prices have remained under downward pressure as Lower-48 production continues to grow faster than underlying secular demand. How much longer can the market sustain a growing production input to the supply and demand balance? Declining net imports help the supply side, along with two cold winters and two record hot summers, plus gains in market share against coal-based generation have kept the market from collapsing to producer shut-in costs. Activity in Marcellus, Eagle Ford, and the mid-Continent will exceed declines in Haynesville and Barnett shales and lead to 2012 production at higher levels than 2011. Will increasing demand, declining net imports, weather, or increases in storage capacities and inventories solve the imbalance? Or will it come down to price?

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