The once unthinkable level of 100 Bcf/d for U.S. natural gas production is just around the corner, it would seem. Lower-48 gas production last week hit a new high of 96.4 Bcf/d, after surpassing 95 Bcf/d not too long ago (in late October). That’s remarkable considering that production was only 52 Bcf/d just 12 years ago. Gas demand from domestic consumption and exports this year has set plenty of records of its own, but the incremental demand has not been nearly enough to keep the storage inventory from building a significant surplus compared with last year. CME/NYMEX Henry Hub prompt gas futures prices tumbled nearly 40 cents last week to $2.28/MMBtu, the lowest November-traded settle since 2015. Today, we break down the supply-demand fundamentals behind this year’s bearish storage and price reality.
U.S. natural gas prices have plumbed historical depths this year. As we wrote in our I’m Tore Down blog two months ago, daily Henry Hub prompt futures settles from April through September 2019 (black line in Figure 1) averaged $2.41/MMBtu, the lowest seasonal average since the late 1990s, according to CME/NYMEX data from the Energy Information Administration (EIA). That trend continued in October, when prompt futures averaged $2.33, again at a two-decade low. Prices rallied somewhat earlier in November to as high as $2.862/MMBtu, as the market took a cue from what were at the time bullish, much-colder-than-normal weather predictions for late November and early December.
https://rbnenergy.com/un-thinkable-is-the-market-ready-for-100-bcfd-us-natural-gas-production
Remember, Obama said we cannot drill our way to lower gas prices.
