Monthly natural gas production

On March 30, 2018, the EIA released its monthly natural gas production data. The EIA reported that US dry natural gas production declined 1.1% to 79.9 Bcf (billion cubic feet) per day in January 2018—compared to December 2017. However, production increased by 6.9 Bcf per day or 9.6% from a year ago. Production hit a record high of 80.9 Bcf per day in December 2017.

US Natural Gas Production Is near a Record Level

Weekly US natural gas production 

PointLogic, a market intelligence company, estimates that US dry natural gas production rose 0.5% to 79.6 Bcf per day on March 29–April 4, 2018. Production also increased 12% or by 8.4 Bcf per day year-over-year.

US natural gas prices have declined ~12.5% year-to-date partly due to increasing supplies. The Vanguard Energy ETF (VDE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) have declined ~4.3% and 4% during the same period. VDE aims to track an index of energy stocks. XOP aims to track 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. As a result, higher oil prices could increase US crude oil rigs, which could increase US natural gas production.

US oil prices have risen ~50% since June 21, 2017, partly due to ongoing supply cuts. The iShares US Energy ETF (IYE) and the iShares Global Energy ETF (IXC) have risen ~10.5% and ~15.6%, 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.

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 forecast that US natural gas production could average ~81.7 Bcf per day in 2018 and ~82.67 Bcf per day in 2019. US natural gas production’s annual average could hit a new record this year and next year.

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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