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US Natural Gas Production Fell on April 12–18

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Nov. 20 2020, Updated 11:07 a.m. ET

Weekly US natural gas production 

PointLogic, a market intelligence company, estimates that US dry natural gas production fell 0.6% to 79.6 Bcf (billion cubic feet) per day on April 12–18, 2018. However, production increased 11% or by 7.9 Bcf per day year-over-year.

US natural gas futures has decreased ~13% year-to-date partly due to increased production. The United States Natural Gas ETF (UNG) and the First Trust Natural Gas ETF (FCG) have declined ~5.3% and 3% during the same period. UNG aims to follow active US natural gas futures. FCG aims to track the performance of the ISE-Revere Natural GasTM Index.

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Drivers of natural gas production  

Higher crude oil prices and the natural gas pipeline capacity have been driving the rise in natural gas production. Natural gas is usually an associated product of crude oil. As a result, higher oil prices could increase US crude oil rigs, which could increase US natural gas production.

WTI oil prices have risen ~60.5% since June 21, 2017, partly due to supply cuts by major world producers. The iShares US Energy ETF (IYE), the Vanguard Energy ETF (VDE), and the iShares Global Energy ETF (IXC) have increased ~19%, 19%, and ~23%, respectively, since June 21, 2017. IYE aims to track an index of US equities in the energy sector. IXC aims to track an index of global equities in the energy sector. VDE aims to follow the performance of an index of energy stocks.

Natural gas production estimates  

Annual US dry natural gas production has increased 48% since 2005. US production averaged 73.6 Bcf per day in 2017.

The EIA estimates that US natural gas production could average ~81.08 Bcf per day in 2018 and ~82.79 Bcf per day in 2019. US natural gas production’s annual average could reach a new record in 2018 and 2019.

Impact  

Record US natural gas production could pressure natural gas prices in 2018 and 2019.

Next, we’ll discuss US natural gas consumption.

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