Moody’s Investor Service this week maintained its forecast for North American natural gas prices, saying that declining production will help to bring the oversupplied market to balance.

The credit ratings agency left unchanged its Henry Hub natural gas price outlook of $2.00/MMBtu in 2020 and $2.25 in 2021.

Moody’s said U.S. natural gas oversupply will gradually taper off through 2021, as key producers scale back capital investment and production this year and next — primarily in Appalachia, North America’s largest producing region, where reductions are already underway.

The current glut will strain prices over the summer, but lower supplies by later in the year “will support a recovery in natural gas prices to our medium-term price range in 2020,” Moody’s said. It forecasts Henry Hub prices recovering to the $2.00-3.00 range this coming winter.

Second quarter demand has waned amid fallout from the coronavirus pandemic — notably among industrial consumers whose operations are closed or below capacity because of stay-at-home orders and other government restrictions.

But the secular shift from coal to natural gas bodes well for prices when businesses start to emerge from partial economic shutdowns.

“Because natural gas prices started to decline in mid-2019, demand and supply responses are now well underway,” Moody’s said. “The North American electricity sector has accelerated its switching to natural gas from coal, even with an overall leveling off in gas demand from utilities in the second quarter of 2020.”

The prospects for oil, however, worsened.

Moody’s cut its outlook for oil prices through 2021, citing excess supply and light demand as the economy stalled and travel ground to a crawl because of the pandemic. It now expects West Texas Intermediate (WTI) will average $30/bbl in 2020 — a level it previously considered a downside pricing scenario — and $40 in 2021. The forecast for each year equates to $5 below Brent, the international crude benchmark.

“Delayed but now robust supply responses” that include the recent agreement by the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, to reduce production by almost 10% starting in May, as well as “an accelerating production decline in the U.S. and Canada — have not kept pace with falling demand to date,” Moody’s wrote.

Economic activity is expected to recover into 2021, but Moody’s said oil demand may return only gradually because of an expected sluggish recovery in transportation. High inventories could also delay price recovery.

“Exceptionally weak short-term prices will persist until enough production curtailments can ease the strain on storage facilities already operating at or close to full capacity,” Moody’s said.

In the most recent Short-Term Energy Outlook by the U.S. Energy Information Administration, government analysts pegged WTI at an average $29.34, down 23% from its previous forecast.