In early August, I went out on a limb with a pair of calls on natural gas. First, I argued that due to the ability of operators like Anadarko Petroleum (NYSE:APC) and EOG Resources (NYSE:EOG) to do more with less, "near-term declines may not be as dramatic as is broadly expected." That, combined with the decision by Chesapeake Energy (NYSE:CHK), XTO Energy (NYSE:XTO), and other producers not to hold back in the face of oversupply, would lead natural gas prices below $3.

The $2 handle on natural gas came just about two weeks later. After briefly retaking the $3 level last week, gas futures are touching new 2009 lows today. That brings us back to my first point regarding softer-than-expected industry-wide production declines.

At the end of each month, the Energy Information Administration reports national gas production on form EIA-914, with a two-month lag. Last week we got the June data, and it does little to dispel the case for lower natural gas prices. Across the lower 48 states, daily production actually showed an uptick of 0.5% compared to May. In my mind, you might as well call that flat production, but it's certainly not the sort of result you'd typically expect after such a vertiginous drop in the rig count.

I should point out that Gulf of Mexico production came in much higher sequentially, at the highest rate in close to a year. BP's (NYSE:BP) Thunder Horse field, which is ramping to 200 million cubic feet per day, is just one large project to come online this year.

Looking onshore, though, the only decline of any size was in New Mexico, which saw daily production drop 3% sequentially. Texas -- which accounted for a third of nationwide volumes, partially on account of Devon Energy (NYSE:DVN) and many others plugging away in the Barnett Shale -- dropped at a slower rate (-0.7%) than in the prior two months.

Again, I do believe that decline rates will carry the day eventually. The bottom for natural gas still lies ahead, though, so forget about picking up shares of the U.S. Natural Gas Fund (NYSE:UNG). Size up your favorite E&P, and pick your moment of entry carefully.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. Chesapeake Energy is an Inside Value selection. The Motley Fool owns shares of Chesapeake and XTO. The Fool has a disclosure policy.