Weekly US natural gas production
PointLogic reported that US dry natural gas production rose 0.4% to 70.5 Bcf (billion cubic feet) per day from February 16–22, 2017. Dry natural gas production fell 4.8% compared to the same period in 2016.
The rise in natural gas production is bearish for natural gas (FCG) (UGAZ) (UNG) prices. Lower natural gas prices have a negative impact on natural gas producers’ earnings such as Memorial Resources (MRD), WPX Energy (WPX), Southwestern Energy (SWN), and Range Resources (RRC). For more on natural gas prices, read Part 1 of this series.
Peak and lows
The EIA (U.S. Energy Information Administration) estimates that monthly US dry natural gas production peaked at 76.8 Bcf per day in July 2015—the highest level ever. Natural gas production hit 71.5 Bcf per day in June 2016. It was the lowest natural gas production figure since June 2014. US natural gas production fell due to weak natural gas (DGAZ) (BOIL) and crude oil (XLE) (PXI) (USL) prices in early 2016. For more on monthly natural gas production, read US Natural Gas Production Could Pressure Prices.
EIA’s natural gas production estimates
The EIA estimates that US dry natural gas production could average 73.7 Bcf per day in 2017 and 77.7 Bcf per day in 2018. US dry natural gas production averaged 72.4 Bcf per day in 2016 and 74.1 Bcf per day in 2015. In 2016, US natural gas production fell for the first time since 2005.
Impact of rising natural gas production
In his energy policy, President Trump highlighted that he would reduce regulatory restrictions on the exploration and production of natural gas and crude oil. He said that he would open more federal land for exploration and production activity. If his policies are implemented, it would increase natural gas supplies in an oversupplied natural gas market. The rise in production in 2017 is bearish for natural gas prices.
Natural gas production influences US natural gas inventories. For more on natural gas inventories, read Part 3 of this series. Higher production and inventories can pressure natural gas prices.
In the next part of this series, we’ll take a look at the latest updates on natural gas consumption.