John Kemp of JkempEnergy.com reports that U.S. natural gas production is declining due to lower prices and reduced drilling, shrinking surplus inventories from last year’s mild winter. In September, production averaged 102.1 bcf/d, down from 104.4 bcf/d a year ago, per EIA data. Kemp writes:
U.S. gas production is turning down in response to lower prices and less drilling, eroding excess inventories inherited from last year’s very mild winter and lifting prices from their record lows earlier this year.
Dry gas production averaged 102.1 billion cubic feet per day (bcf/d) in September down from 104.4 bcf/d in the same month a year earlier, according to data from the U.S. Energy Information Administration (EIA).
The decline was the largest since the coronavirus pandemic ravaged production and consumption in 2020 and before that the last major price slump in 2016. […]
But the surplus had narrowed sharply from 634 bcf (+39% or +1.36 standard deviations) at the end of winter 2023/24.
As the surplus has narrowed, prices have climbed; by November, front-month prices had risen by an average of more than $1 per million British thermal units (+68%) from their March low. […]
But the combination of falling production, rising consumption by power generators, and growing exports implies the surplus will very likely shrink again even if winter temperatures remain close to the recent average.
Surplus inventories are likely to be eliminated by the end of winter 2024/25 – at which point prices will have to increase to encourage more production in order to satisfy the growing demand from generators and exporters.
Read more here.
