Production numbers continue to steadily decline as drilling activity is starting to affect daily production levels. Production is averaging 1.8 Bcf/d less than the record levels set in February. Since the production record was set, totals have fallen from 73.2 Bcf/d in February, to 72.2 Bcf/d in March, and then 71.4 Bcf/d in April. In 2016, year-to-date production has averaged 72.2 bcf/d and demand has grown to average 81.6 Bcf/d. This decline in drilling activity and production, coupled with growing demand has seen prices jump over 10% since lows set in February and early march. The natural gas futures settle at $2.08 last Thursday and analysts believe that prices will hover around the $2.00 range during the remaining shoulder months, or at least until increase summer demand appears and production declines accelerate.
Keeping prices low are the lingering weather effects from El Nino, as well as, total storage inventories. The 68 Bcf injection this week was yet again above consensus expectations of 64 Bcf. Total inventories now sit 48.8% above last year’s levels, and 46.7% above the five-year average. Above normal temperatures are likely in May across most of the contiguous US.