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Research Outline

Prepared for Einars | Delivered August 7, 2019

U.S. Natural Gas Industry

Goals

Updated information on the U.S. Natural Gas industry, including the market outlook for 2019 through the first half of 2020, and existing & forecast expected demand/supply during this period.

Early Findings

  • The EIA predicts that U.S. dry natural gas production "will average 91.0 billion cubic feet per day (Bcf/d)" for the rest of 2019.
  • The monthly average natural gas production is expected to grow throughout late 2019 and then "decline slightly during the first quarter of 2020 as the lagged effect of low prices in the second half of 2019 reduces natural gas-directed drilling." However, this growth will resume by the 2nd quater of 2020 and by that time, natural gas production will average 92.5 Bcf/d.
  • By July 2019, natural gas inventories ended at 2.7 trillion cubic feet (Tcf), which is about 13% higher than the previous year and 4% lower than the 5-year average.
  • In addition, natural gas storage injections during the "2019 April-through-October injection season will outpace the previous five-year average and that inventories will rise to more than 3.7 Tcf at the end of October, which would be 16% higher than October 2018 levels and slightly above to the five-year average." 
  • Recently, US natural gas has seen a decline in price. This decline is said to reflect the "relatively mild weather for the start of summer that led to lower than expected natural gas-fired electricity generation, which allowed natural gas inventory injections to outpace the previous five-year average rate." 
  • The U.S. Energy Information Administration (EIA) expects supply growth to moderate by late 2019 through 2020. When this happens, natural gas prices will most likely increase.  
  • For the past few weeks, natural gas demand in the US has been expanding in annual terms.
  • Dry gas production in the US has been "expanding in annual terms for 112 consecutive weeks now, but the growth rate is weakening due to base effects." Dry gas production is projected to average 90.66 bcf/d by the end of August and 91.05 bcf/d in September 2019.
  • In the US natural gas market, the first six months of 2019 was quite eventful as "US production hit an all-time high, global export and import concerns impacted foreign relations and international demand continued to grow."