Weekly US natural gas production
Market data provider PointLogic reported that weekly US dry natural gas production rose 0.3% to 70 Bcf (billion cubic feet) per day between April 27 and May 3, 2017. Production fell 3.2% compared to the corresponding period in 2016.
The fall in production is bullish for natural gas (GASL) (BOIL) (DGAZ) prices. Higher natural gas prices have a positive impact on the earnings of natural gas producers like Newfield Exploration (NFX), Memorial Resource Development (MRD), Southwestern Energy (SWN), and EQT (EQT). For more on natural gas prices, read part one and part two of this series.
Peaks and lows
The 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. In contrast, production hit 71.5 Bcf per day in June 2016, the lowest natural gas output figure since June 2014.
EIA’s natural gas production estimates
The EIA estimates that US dry natural gas production will average 73.1 and 77.1 Bcf per day in 2017 and 2018, respectively. Production averaged 74.1 Bcf per day and 72.3 Bcf per day in 2015 and 2016, respectively. In 2016, production fell for the first time since 2005.
Impact of rising natural gas production
Natural gas is an associated product of crude oil. The rise in US crude oil output in 2017 will also lead to a rise in US natural gas supplies in 2017.
Successful implementation of President Trump’s proposed energy policies could also increase US oil and gas production. The rise in production in 2017 is the biggest bearish catalyst for natural gas prices.
Natural gas production influences US natural gas inventories. For more on natural gas inventories, read part three of this series. In the next part of this series, we’ll take a look at the latest updates on natural gas consumption.