U.S Natural Gas Analysis – March-5-2024

NATGAS Analysis – Natural gas prices in the US are climbing, hitting a nearly three-week peak at $1.94 for every million British thermal units (MMBtu). This rise follows an 8% increase last week.

What is the reason behind this surge? Companies that extract natural gas are cutting down on their activities. Reports from the end of the month show that they’re pulling out much less natural gas than at the beginning.

NATGAS Analysis 4-Hour Chart

NATGAS Analysis: Reductions in Natural Gas Production

Major natural gas producers like EQT and Chesapeake Energy are significantly reducing their output. EQT has decreased its production by almost one billion cubic feet daily, a change expected to last until March. This decision comes as a response to the continuously low natural gas prices.

Similarly, Chesapeake Energy plans to produce about 30% less fuel in 2024 following recent price drops. They’re not alone, as Antero Resources and Comstock Resources are also cutting back on their drilling activities this year.

Storage and Export Adjustments Impacting the Market

Even as production drops, there’s an expected increase in natural gas flows to LNG (liquefied natural gas) export facilities. This is partly because the Freeport LNG facility is set to return to entire operation. Yet, it’s important to note that despite these changes, the latest data from the Energy Information Administration (EIA) shows that natural gas storage levels are still 26.5% above the average.

This suggests that while there’s a decrease in production and an increase in exports, the market still has a considerable supply.