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Is US Natural Gas Production Helping Natural Gas Bears?

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Weekly US natural gas production 

US dry natural gas production fell by 0.5 Bcf (billion cubic feet) per day or 0.7% to 76.2 Bcf per day on November 30–December 6, 2017, according to PointLogic. However, production rose by 5.4 Bcf per day or 7.6% from the same period in 2016. The YoY (year-over-year) increase in US natural gas production will have a negative impact on natural gas (UGAZ) (UNG) prices.

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EIA’s monthly US natural gas production

On November 30, 2017, the EIA reported that US dry natural gas production fell by 0.9 Bcf per day or 1.2% to 75 Bcf per day in September 2017—compared to the previous month. Production rose by 3.1 Bcf per day or 4.3% from the same period in 2016. It’s also near a 15-month high.

Weekly US natural gas consumption 

US natural gas consumption rose by 5.2 Bcf per day or 7.7% to 72.1 Bcf per day on November 30–December 6, 2017, according to PointLogic. However, consumption fell by 1.8 Bcf per day or 2.4% from the same period in 2016. The YoY decline in consumption is bearish for natural gas (DGAZ) (GASL) prices.

Lower gas (BOIL) prices could have a negative impact on energy producers (IYE) (IEO) like Gulfport Energy (GPOR), Rice Energy (RICE), Rex Energy (REXX), and Antero Resources (AR). 

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EIA’s monthly US natural gas consumption

US natural gas consumption fell by 6.9 Bcf per day or 10% to 64.3 Bcf per day in September 2017—compared to the previous month. It also fell by 0.7 Bcf per day or 1.1% from the same period in 2016.

Impact 

US natural gas production and consumption will average 78.9 Bcf per day and 76.8 Bcf per day in 2018, respectively, according to the EIA. Excess supplies would pressure natural gas (UNG) prices. However, an increase in exports would limit the impact of oversupply. 

In the next part, we’ll discuss what could drive natural gas prices next week.

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