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Natural Gas Production Remains Robust, Should Pressure Prices

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Natural Gas Production Last Week

The EIA (Energy Information Administration) reported that total natural gas production increased slightly by ~0.2% in the week to June 5, compared to the week prior, according to data from Bentek Energy. It was ~6% greater than the corresponding week last year.

Total Marketed Production for the month of March, the latest month EIA has provided data for, was ~78.1 bcf/d (billion cubic feet per day). Marketed natural gas is the gas produced, before associated liquids like propane and butane are extracted. The removal of these liquids leaves dry natural gas.

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Forecast Production Trends for 2015

The Energy Information Administration continues to be bullish about natural gas production in 2015. The EIA’s June Short-Term Energy Outlook (or STEO), released on June 9, projects total marketed natural gas production will grow 5.7% over 2014, to 78.96 bcf/d (billion cubic feet per day) in 2015, and by a further 2% to 80.56 bcf/d in 2016. It pegs total marketed natural gas production at 74.72 bcf/d for 2014.

Continued production growth may pressure natural gas prices (UNG), if demand doesn’t rise as much. Weak prices hurt gas-producing companies like Chesapeake Energy (CHK), Noble Energy (NBL), Range Resources (RRC), and Antero Resources (AR)are components of the iShares U.S. Energy ETF (IYE), and make up 2.1% of the ETF.

Natural gas inventories are governed by natural gas production and consumption trends. The next part analyzes natural gas consumption trends.

 

 

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