Chesapeake Energy announced a cut in its 2024 gas production estimates in response to the recent drop in gas prices to a 3.5-year low, which caused natural gas to see a significant jump, finishing up 11.84% at 147.4. This action by Chesapeake is part of a larger trend, as other gas producers like Antero Resources, Comstock Resources, and EQT have also reduced drilling activities and spending in response to a notable 31% drop in gas prices in 2024, which comes after a 44% drop in 2023.
The Lower 48 states of the United States produced an average of 105.6 billion cubic feet per day (bcfd) in February, up from 102.1 bcfd in January, according to LSEG. This amount of petrol output was still below the monthly high of 106.3 bcfd set in December. Warmer-than-normal weather forecasts through March 6th led to a forecast of decreased U.S. petrol consumption in the Lower 48, including exports, from 130.3 bcfd this week to 117.5 bcfd the following week, notwithstanding the increase.
In terms of technicals, the natural gas market saw short covering, resulting in a notable decline in open interest of 27.95%, which ultimately settled at 41,035. Even with a 15.6 rupee price increase, the market found support at 138.9, with 130.3 perhaps serving as a test. A breakout might take the price to 156.9. Resistance is expected around 152.2. The technical picture points to a market responding to news of a production cut with declining prices, and traders should keep an eye on important support and resistance levels for any possible trend development.
