Weekly US natural gas production 

PointLogic estimates that US dry natural gas production increased ~1% to 80.9 Bcf (billion cubic feet) per day on June 21–27. The production also increased 13.5% or by 9.6 Bcf per day year-over-year.

According to Reuters, US dry natural gas production in the lower 48 US states has averaged a record high of 79.59 Bcf per day during the last 30 days. On a daily basis, US dry natural gas production rose to a new record of 80.87 Bcf per day on June 27.

The news of record production pressured natural gas prices. Active US natural gas (UNG) futures fell 1.4% to $2.94 per MMBtu (million British thermal units) on June 28. 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 0.1% on June 28. However, natural gas–weighed stocks EQT (EQT), Gulfport Energy (GPOR), and Cabot Oil & Gas (COG) rose 2.3%, 1.8%, and 1.2%, respectively, on June 28.

Record US Natural Gas Production Weighs on Prices

Active US natural gas futures almost hit a 13-month high on January 29. Since then, the prices have fallen ~19% partly due to increased production and mild weather.

Drivers of natural gas production  

Higher WTI crude oil prices and the improving natural gas pipeline capacity in the US led to a rise in the natural gas output. Natural gas is often an associated product of crude oil produced in US shale formations.

Active WTI crude oil futures have risen ~72.7% since June 21, 2017, partly due to supply cuts by major oil producers. The prices also rose due to a huge drop in US crude oil inventories and record US crude oil exports. Oil supply outages in Libya and Canada, sanctions on Iran, and a continuous oil production decline in Venezuela also helped oil prices.

As a result, higher oil prices could increase the number of active US crude oil rigs, which could increase oil and natural gas production. Higher natural gas supplies could pressure natural gas prices.

Natural gas production estimates  

Annual US dry natural gas production has risen 48% since 2005. The production averaged 73.6 Bcf per day in 2017. The US natural gas output could average ~81.20 Bcf per day in 2018 and ~83.78 Bcf per day in 2019, according to the U.S. Energy Information Administration. Annual US natural gas production’s average could hit a new record this year and next year if these projections are achieved.

Impact  

Record US natural gas production could pressure natural gas prices.

Next, we’ll discuss US natural gas consumption.

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