Weekly US natural gas production
According to PointLogic, US dry natural gas production increased 0.1% to 78.4 Bcf (billion cubic feet) per day on March 8–14, 2018. The production also increased 10% or by 7.1 Bcf per day year-over-year. Reuters estimates that natural gas production could increase next week. The rise in natural gas production could pressure natural gas prices in upcoming trading sessions.
US natural gas prices have declined ~12.2% year-to-date partially due to rising supplies. The Vanguard Energy ETF (VDE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) have declined ~7% and 8.4%, respectively, during the same period. VDE tracks the performance of an index of energy stocks. XOP tracks the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
Drivers of natural gas production
Higher crude oil prices and the natural gas pipeline capacity have been driving the rise in natural gas supplies. Natural gas is usually an associated product of crude oil. So, higher oil prices could increase US oil rigs, which could increase US natural gas production.
WTI oil prices have risen ~44% since June 21, 2017, partly due to production cuts. The iShares US Energy ETF (IYE) and the iShares Global Energy ETF (IXC) have risen ~7.3% and ~11%, respectively, since June 21, 2017. IXC tracks the performance of an index of global equities in the energy sector. IYE tracks the performance of an index of US equities in the energy sector.
Natural gas production estimates
Annual US natural gas production has risen 48% since 2005. Production averaged 73.6 Bcf per day in 2017. US natural gas production could average ~81.7 Bcf per day in 2018 and ~82.67 Bcf per day in 2019, according to the EIA. US natural gas production’s annual average could hit a new record in 2018 and 2019.
Record US natural gas production could be bearish for natural gas prices in 2018.
Next, we’ll discuss US natural gas consumption.