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Will US Natural Gas Production Pressure Natural Gas Prices?

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Sep. 18 2017, Updated 9:36 a.m. ET

Weekly US natural gas production 

Market data provider PointLogic estimates that weekly US dry natural gas production rose by 0.2 Bcf (billion cubic feet) per day to 73.9 Bcf per day from September 7 to 13. US dry natural gas production rose 0.3% week-over-week and 1.9 Bcf per day or 2.6% year-over-year.

Any rise in natural gas production can have a negative impact on natural gas (UGAZ)(DGAZ)(FCG) prices. Lower natural gas prices are negative for natural gas producers’ earnings, including Southwestern Energy (SWN), Cabot Oil & Gas (COG), and Newfield Exploration (NFX).

For details on the monthly US dry natural gas production, see Why US Natural Gas Production Fell from a 10-Month High.

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EIA’s natural gas production estimates 

The EIA (U.S. Energy Information Administration) released its “Short-Term Energy Outlook” (or STEO) report on September 12. It estimates that US dry natural gas production will average 73.7 Bcf per day in 2017, which is 0.3% higher than previous estimates from the August STEO report.

The EIA also estimates that US dry natural gas production will average 78.1 Bcf per day in 2018, which is 1% higher than previous 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 eleven years in 2016.

Impact  

Any rise in US natural gas production could weigh on natural gas (UNG)(BOIL) prices. Lower natural gas prices have a negative impact on natural gas producers’ earnings, including Newfield Exploration and Cabot Oil & Gas.

In the next part of this series, we’ll discuss US natural gas consumption.

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