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Natural Gas Production Falls but Is Higher Than It Was Last Year

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Natural gas production last week

The EIA (U.S. Energy Information Administration) reported that total natural gas supply declined by a slight 0.2% week-over-week, according to data from Bentek Energy. Yet inventories were still ~7.2% greater than the corresponding week last year.

Total marketed production for the month of February, the latest month EIA has provided data for, was 78.6 Bcf per day (billion cubic feet per day). Marketed natural gas is the gas produced before associated liquids including propane and butane are extracted. The removal of these liquids leaves dry natural gas.

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Forecast production trends for 2015

The EIA remains bullish about natural gas production in 2015. The EIA’s “Short-Term Energy Outlook,” released on May 12, projects that total marketed natural gas production will grow by 6% over 2014 to 79.22 Bcf in 2015, and by a further 1.7% to 80.56 Bcf in 2016. It pegs total marketed natural gas production at 74.72 Bcf in 2014.

Continued production growth will keep natural gas prices (UNG) relatively low. Weak prices hurt gas-producing companies including Chesapeake Energy (CHK), Noble Energy (NBL), Range Resources (RRC), and Antero Resources (AR). All of these companies combined make up 2.1% of the iShares U.S. Energy ETF (IYE).

Natural gas inventories are governed by natural gas production and consumption trends. The concluding part of this series analyzes natural gas consumption trends.

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