The price of natural gas dropped sharply by -4.09% to 143.1, mostly due to record supply, a surplus of fuel in storage, and a decrease in heating demand. During the week ending February 16, 60 billion cubic feet of natural gas were drawn from storage; this amount was less than the 64 billion cubic feet that the market had anticipated.
Despite this reduction, overall inventories are currently at 2.470 trillion cubic feet (tcf), which is 265 billion bcf more than last year’s levels and 451 billion more than the five-year average of 2.019 tcf. The total working gas is currently above the historical five-year range due to storage levels.
Along with similar plans from other large gas producers such as Antero Resources, Comstock Resources, and EQT, Chesapeake Energy’s decision to reduce its 2024 gas output predictions by almost 20% points to a broader industry trend of reduced drilling efforts. Gas production is predicted to drop to about 2.7 billion cubic feet per day as a result of this output reduction.
Near-record output, ample fuel storage, and above-average temperatures also have an impact on the natural gas market; as a result, U.S. natural gas prices are at their lowest since June 2020, at $1.522/MMBtu. Gas flow to LNG export terminals was further disrupted by technical problems at Freeport LNG’s export facility.
