US Natural Gas Production Surges to Record High as Demand Drops
US natural gas production surged on Friday, reaching 108.4 billion cubic feet per day (bcf/day), a 5.4% increase from last year. Meanwhile, demand in the Lower-48 states dropped by 7.4% year-over-year to 66.4 bcf/day.
The US Energy Information Administration (EIA) reported a rise of 53 billion cubic feet (bcf) in natural gas inventories for the week ended September 26. This figure fell short of the 5-year weekly average of 85 bcf. The inventory build was smaller than expected, leading to a price jump on Thursday to a 2.5-month high.
Forecasts for warm mid-October weather in the USA are putting downward pressure on natural gas prices. Higher US production, nearing record highs, has also been a bearish factor. November Nymex natural gas (NGX25) closed down by -0.118 (-3.43%) on Friday.
Estimated LNG net flows to US LNG export terminals on Friday were 15.7 bcf/day, a 1% decrease from the previous week. Despite this, the Edison Electric Institute reported a 5.96% year-over-year increase in US (lower-48) electricity output for the week ended September 27.
The US natural gas market saw a mixed week. While production and demand shifted, inventory builds fell short of expectations, leading to price volatility. Warm weather forecasts and high production levels continue to influence prices. The coming weeks will provide more clarity on the direction of the market.
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