US Gas Production, Prices Headed in Opposite Directions
US natural gas continued to set production records in August, the US Energy Information Administration (EIA) said September 12, but prices continued to decline, despite growing exports and strong demand from the power generation sector.
A new daily record for gas production – 92.8bn ft3/day – was established on August 19, the EIA said, citing estimates from IHS Markit, while monthly production in August averaged a record 91bn ft3/day. From now through the end of this year, the EIA is estimating that US dry natural gas production will average 93.4bn ft3/day.
As recently as January 2018, EIA data shows, US production was averaging just a little over 70bn ft3/day. And the same month, the EIA forecast US gas production would reach just 83bn ft3/day in 2019.
While production has surged this year, US natural gas prices have steadily declined since the spring, and spot gas at other trading hubs across the US have continued to trade at a discount to the benchmark Henry Hub price, the EIA said.
The Henry Hub price averaged $2.40/mn Btu in June and $2.37/mn Btu in July, the agency said, the lowest June and July monthly averages since 1999, as growth in production offset growth in consumption.
But the EIA is forecasting some modest recovery through the balance of this year, with Henry Hub ultimately reaching a $2.55/mn Btu average in December as winter heating demand begins to take hold.