Soaring natural gas prices in the United States prompt drillers to return to the well in May – 05/24/2024 at 6:57 p.m.

Soaring natural gas prices in the United States prompt drillers to return to the well in May – 05/24/2024 at 6:57 p.m.
Soaring natural gas prices in the United States prompt drillers to return to the well in May – 05/24/2024 at 6:57 p.m.

((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Scott DiSavino

The 63% rise in U.S. natural gas futures prices over the past three weeks was enough to prompt some drillers to start extracting more fuel from the ground, according to energy analysts and data from the financial company LSEG.

To be sure, gas production was still down about 8% year to date, after several energy companies, including EQT EQT.N and Chesapeake Energy CHK.O , delayed well completions and cut back further drilling activity after prices fell to their lowest level in three and a half years in February and March.

But now that some drillers have stopped cutting production and started increasing it again, NGc1 gas futures prices are down about 2% since the start of the week. These prices have fallen despite the heat wave in Texas which is expected to push electricity demand in the state to a record level for the month of May, for the second time this week. NGA/

“Forecasts of strong demand this summer for cooling and increased LNG (liquefied natural gas) exports have caused producers to reconsider their position, resulting in increased production,” said John Kilduff , partner at Again Capital LLC in New York.

“It doesn’t take much for growers to regain confidence and increase production,” Mr Kilduff said.

LSEG said gas production in the lower 48 U.S. states had fallen to an average of 97.5 billion cubic feet per day (bcfd) so far in May, down from 98.2 bcfd in april. This figure compares to the monthly record of 105.5 billion cubic feet per day recorded in December 2023.

On a daily basis, however, production has increased by about 1.5 billion cubic feet per day since hitting a 15-week low of 96.2 billion cubic feet per day, May, the 1st.

One billion cubic feet is enough gas to power about 5 million American homes for a day.

“Gas production is showing signs of life as Appalachian supply hits its highest level in two months, thanks to indications that EQT has returned some of the volumes reduced amid the recent price hike” , analysts at consulting firm EBW Analytics Group said in a note.

Officials from EQT, Chesapeake and other major U.S. gas producers were not immediately available for comment.

EQT is the largest U.S. gas producer and Chesapeake is poised to become the largest producer after its merger with Southwestern Energy SWN.N .

SUPPLY, DEMAND AND NEW DRILLINGS

With prices falling earlier this year, U.S. drillers reduced the number of gas rigs to just 102 at the start of May, the lowest since December 2021, according to a report from the services company energy companies Baker Hughes BKR.O .

Over the past two weeks, however, that number has increased slightly to 103 gas drilling rigs.

The reduction in production at the start of the year led the US Energy Information Administration (EIA) to forecast a decline in US gas production () in 2024, even as domestic demand and LNG exports were on track to reach all-time highs.

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