The EIA actual figures were recently released through October an such confirmed what the estimated/anecdotal information was showing during that period.Dry market production averaged 70.7 bcf/d for October. This is a month-on-month decline of 1.2 bcf/d and is a drop of 3.4 bcf/d from the same month a year before.
Estimates since then have production around 70.5 bcf/d in November and December. So the precipitous decline during this past year “may” have slowed the pace a bit into the end of 2016. Nonetheless, dry marketed production is down by 4.7 bcf/d from the all-time peak of 75.4 bcf/d in September 2015.And a year-on-year production deficit of 3 to 4 bcf during 2017 (if that holds) will imply that the market will have to keep prices relatively high enough to prevent high levels of coal-to-gas fuel switching in the face or rising LNG exports, Mexican exports and increased industrial demand next year.
Natural Gas Production
Natural Gas Production
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Natural Gas Production
The last five weeks of 2016 (weeks ending 12/2, 12/9, 12/16, 12/23 and 12/30) had total draws from natural gas storage of 684 Bcf. This compares to the 5-year average draws for the last five weeks of the year of 446 Bcf. The 238 Bcf difference pushed storage below the 5-year average.
There were only two weeks that were significantly colder than normal (12/16 and 12/23). A 238 Bcf higher draw for December is a HUGE deviation from "normal".
The point that I'm trying to make here is that more than the weather goes into the natural gas supply & demand. U.S. production is down and non-weather related demand is up and expected to go 3.5 Bcf per day higher YOY in 2017.
Yes, we are going to have a milder than normal January and draws from storage may indeed be below the 5-year average, BUT I still think just "near-normal" temperatures in the first quarter will leave ending natural gas storage heading into April WAY BELOW where storage was a year ago.
Lots of "debate" between the speculators who set the gas price, which is why we are seeing these big swings in the NYMEX futures contracts.
There were only two weeks that were significantly colder than normal (12/16 and 12/23). A 238 Bcf higher draw for December is a HUGE deviation from "normal".
The point that I'm trying to make here is that more than the weather goes into the natural gas supply & demand. U.S. production is down and non-weather related demand is up and expected to go 3.5 Bcf per day higher YOY in 2017.
Yes, we are going to have a milder than normal January and draws from storage may indeed be below the 5-year average, BUT I still think just "near-normal" temperatures in the first quarter will leave ending natural gas storage heading into April WAY BELOW where storage was a year ago.
Lots of "debate" between the speculators who set the gas price, which is why we are seeing these big swings in the NYMEX futures contracts.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group