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Record US Natural Gas Production Kept a Lid on the Prices

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Jul. 30 2018, Updated 11:45 a.m. ET

US natural gas production  

PointLogic estimates that US dry natural gas production increased 0.5% to 81 Bcf (billion cubic feet) per day on July 19–25. The production has increased 11% from a year ago.

Reuters estimates that US dry natural gas production in the lower 48 US states averaged a record high of 80.9 Bcf per day during the last 30 days. On a daily basis, US dry natural gas production hit a new record of 81.5 Bcf per day on July 21, according to Reuters.

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Active US natural gas (UNG) futures rose 0.2% to $2.78 per MMBtu (million British thermal units) on July 26 due to several bullish drivers, which we covered previously in this series. The First Trust Natural Gas ETF (FCG) aims to track the performance of an index of companies mainly involved in natural gas exploration and production. FCG fell 0.13% on July 26. EQT (EQT), Cabot Oil & Gas (COG), and Gulfport Energy (GPOR) fell ~2%, 1%, and 0.5%, respectively, on July 26.

Active US natural gas futures hit nearly a 13-month high of $3.63 per MMBtu (million British thermal units) on January 29. Since then, the prices have fallen ~23.4% partly due to increased natural gas production and mild weather.

Natural gas production estimates  

US natural gas production averaged 73.6 Bcf per day in 2017. The US dry natural gas output could average ~81.34 Bcf per day in 2018 and ~84.46 Bcf per day in 2019. The US natural gas output’s annual average could hit a new record in 2018 and 2019 if the projections are achieved.

Impact  

Higher WTI crude oil prices and the improving natural gas pipeline capacity in the United States could drive the natural gas output. Natural gas is often an associated product of the crude oil produced from US shale formations. So, record US natural gas output could pressure natural gas prices.

Next, we’ll discuss US natural gas consumption.

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