Yahoo Finance NatGas Output Hits Record As $3 To $4 Prices Keep Market In Balance, But Exports May Shake Things Up
Natural gas output ticked up in August.
U.S. Gross Natural Gas Production (Lower 48 States)
Today’s monthly production figures from the Energy Information Administration showed that natural gas production hit yet another record high in August. Output rose from 74.62 bcf/d to 74.82 bcf/d, which is up about 2 bcf/d from the start of the year and 2.3 bcf/d from a year ago.
This growth of roughly 2 bcf/d about matches the growth in demand we’d seen in a typical year. That 2 bcf/d is enough to account for any increase in industrial and electric power demand—the two components of overall natural gas demand that are growing.
In other words, natural gas prices in the $3 to $4/mmbtu range have adequately balanced the market (see Natural Gas Forms Trading Range As Cold October Gives Way To Warm November, Buy On Dips). If prices fell below that range, there wouldn’t be enough supply, and higher prices would likely lead to an oversupply.
That being said, the monkey wrench in the equation may come in 2015, when U.S. natural gas exports become a factor. As gas leaves the country to higher-priced destinations, U.S. production must in turn increase to keep the market balanced. That incremental growth will likely require incrementally higher prices above $4/mmbtu.
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