Natural Gas prices were able to shake off a bearish injection report after Chesapeake put the commodity bears on notice that indeed more production cuts could be coming. The Energy Information Administration broke a string of bearing more bullish than estimates by reporting that working gas in storage was 2,888 Bcf, a net decline of 78 Bcf from the previous week. Yet despite the fact we are swimming in supply, the Chesapeake talk kept the market from collapsing. That is a pretty impressive achievement considering the fact that supply was 714 bcf higher than last year at this time and 714 bcf above the 5-year average. In fact the EIA says that the amount of U.S. working natural gas in underground storage at the end of March, 2012 is expected to be the highest since 1983 for the close of the month, the traditional end of the winter heating season.

Now normally this would be the type of news that would crush the heart and souls of the bottom pickers yet despite perhaps having sticky fingers, threats by Chesapeake gave the bulls a little life when they said that it is possible that they may cut production by another billion cubic feet per day on top of the billion or more that they have already cut. There was some confusion as to whether this was a done deal or just a threat and it seems it is the later. The bottom line is that while the Chesapeake announcement may have stopped the bloodbath in the market, it is also doubtful that this can create a sustained rally.

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