OPEC’s Meeting Could Impact US Natural Gas Production and Prices
Weekly US natural gas production
PointLogic estimates that weekly US dry natural gas production rose by 0.6 Bcf (billion cubic feet) per day to 74.5 Bcf per day on September 14–20, 2017. Production rose by 4.5 Bcf per day or 6.4% during the same period in 2016.
High US natural gas production pressured natural gas (UNG) (UGAZ) (GASL) prices. Prices have fallen 17.11% year-to-date. Lower natural gas prices have a negative impact on natural gas producers’ (XLE) (XOP) profitability like Rice Energy (RICE), EQT (EQT), Rex Energy (REXX), and Exco Resources (XCO).
For details on the monthly US dry natural gas production, read Why US Natural Gas Production Fell from a 10-Month High.
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Major oil producers agreed to cut crude oil production by 1.8 MMbpd (million barrels per day) from January 2017 to March 2018 as part of the production cut deal.
OPEC, US crude oil rig counts, and natural gas production
Natural gas is often a byproduct of crude oil. US crude oil rigs have risen by 433 or 137% from the low in May 2016. The US crude oil rig count rose due to the rise in crude oil prices in 2016.
US crude oil (USO) (UCO) prices are at a four-month high. If OPEC extends the production cut deal, it would push crude oil prices higher. Higher prices would result in higher US drilling activity. As a result, it would increase US crude oil and natural gas production.
EIA’s natural gas production estimates
US natural gas production averaged 74.1 Bcf per day in 2015 and 72.3 Bcf per day in 2016. Production fell for the first time in 11 years in 2016.
The EIA (U.S. Energy Information Administration) estimates that US dry natural gas production will average 73.7 Bcf per day in 2017 and 78.1 Bcf per day in 2018.
In the next part of this series, we’ll discuss US natural gas consumption.