Natural gas prices and related exchange traded funds have rallied off the June lows, partially due to gas companies putting a stopper on production after being burned time and again from previous price spikes.

The United States Natural Gas Fund (NYSEArca: UNG) jumped 39.8% over the past month and surged close to 60% since late June as Nymex natural gas futures advanced to $2.44 per million British thermal units.

Supporting the price gains this time around, Appalachian energy producers have taken a cautious approach to reopening the taps they shut in spring when the coronavirus pandemic pummeled prices in a glutted natgas market, the Wall Street Journal reports.

These energy producers have previously flooded the market in recent years as the nascent U.S. shale industry took off – natural gas has been a byproduct of shale crude oil fracturing.

“Given the way the world is now, you’re more likely to see producers respond to weak pricing rather than a response to strong pricing,” Anna Lenzmeier, who studies Northeastern gas markets for BTU Analytics, told the WSJ.

The high volumes they can bring to market with minimal drilling in areas like Greene County, Pennsylvania, allow producers to meet demand quickly. Meanwhile, a network of pipelines allow them to provide for Chicago and other Great Lakes cities, or to Gulf Coast chemical makers and exporters, depending on best prices, Lenzmeier added.

However, after the coronavirus shutdowns, overseas buyers canceled shipments of liquefied natural gas, or LNG, causing domestic stockpiles to surge and prices to plunge to $1.48 per million British thermal units for July contracts.

Market participants have grown more bullish on natgas prices as the onset of heating season in the Northern Hemisphere will coincide with a strengthening world economy. Additionally, on the supply side, gas inventories have shrunk due to cuts in Appalachian and less oil drilling.

Skeptics, though, are still cautious over the economic recovery and potential for domestic gas storage to fill up again ahead of winter.

“We see more risk than opportunity for the commodity right now,” Houston’s Tudor, Pickering, Holt & Co. told clients.

“If we don’t end up with a cold winter, the bull case for ’21 is pushed into 2022,” CNX Chief Operating Officer Chad Griffith told investors recently. “Producers hoping and praying for those stronger ’21 gas prices are basically betting the balance sheet on winter, and that is a risky proposition.”

For more information on the natural gas market, visit our natural gas category.