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Higher prices are a relief to the battered natural gas industry but are unlikely to spark a big increase in drilling, experts say.

Brennan Linsley/AP

Shunned during the commodity party, natural gas is now shining.

The price of natural gas, which spent years in the gutter while other commodities boomed, is strengthening even as everything from copper to coffee is slumping. Natural gas is up about 13 per cent over the past month and 38 per cent from the middle of February, a sharp contrast from recent big drops in gold, oil and other major commodities.

The recent rise in natural gas prices is largely due to cool spring weather, which has led to a larger-than-expected drawdown of inventories.

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The firmer price for gas is welcome news for an industry that has battled low prices and bulging inventories for years, falling out of favour both with investors and energy executives.

The commodity's upward swing means some natural gas companies will be able to turn a healthy profit, even though prices remain low compared to historic numbers. Natural gas producers spent the lean years revamping budgets, trying to lower their exploration and production costs.

Now that prices have risen, some proucers could cash in.

"The producers are cautiously optimistic," said Reynold Tetzlaff, Canadian energy leader at PricewaterhouseCoopers LLP. "For many companies, it is above their break-even price. There's a lot of companies that have become quite efficient."

Indeed, share prices are surging among the best-positioned companies as companies such as Tourmaline Oil Corp. and Peyto Exploration and Development Corp. generate solid profits.

But the natural gas rally is unlikely to translate into a flurry of new natural gas drilling across North America. Producers want to ensure the positive trend has staying power before once again rewriting their strategies.

"I don't think we're going to see an explosion in natural gas drilling this year," said Andrew Botterill, a senior manager at Deloitte & Touche in Calgary. "When you're spending the kind of capital that you are, short-term increases are nice, but they are not how you make long-term decisions."

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Further, small and mid-sized natural gas companies are still short on capital and investors are not be ready to underwrite their ambitions based on recent surge, said Barry Munro, Ernst & Young's Canadian oil and gas leader.

Natural gas traded around $4.42 (U.S) per million British thermal units on the New York Mercantile Exchange on Thursday, and some traders expect it to average $4.32 in 2013. By comparison, it was worth about $3.88 per MMbtu in the middle of March.

Falling natural gas inventory in the United States is behind the rally. Natural gas in storage in the lower 48 states totalled 1,704 billion cubic feet as of April 12, according to estimates the U.S. Energy Information Administration released Thursday. This is 31 Bcf higher than the previous week, but 794 Bcf – roughly 32 per cent – lower than the same time last year. Further, the most recent storage number is 74 Bcf below the five-year average of 1,778 Bcf, the EIA report said.

Natural gas is a home heating fuel, and the cooler spring meant consumers pulled down storage inventories. Natural gas is also widely used in power generation and oil sands production.

Better gas prices comes as a psychological relief to the battered industry. In recent years amid the slump, "the investment funds, the ones that didn't like gas, stopped meeting with you," said Mike Rose, chief executive of Calgary-based Tourmaline.

Still, Mr. Rose is skeptical that current prices are high enough to reverse the tumble in Canadian gas output, which has steadily declined in recent years. "I don't think there's enough companies that can make it full-cycle, even at this price," he said.

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At Calgary-based Peyto, chief executive Darren Gee notes that Canadian gas prices were 10 per cent higher in 2002 than what traders expect for 2013. "More than a decade ago we had better prices than we have today," he said.

But the past few years have involved a painful series of slashing costs at natural gas companies. Some are now so lean that Peyto expects to increase its production by 35 per cent per share in the current gas price environment.

"I feel really confident about the fact that we've retooled our business to be extremely profitable and be able to grow aggressively in this environment," Mr. Gee said.

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