Strong crude oil production in the U.S. continues to contribute to significant levels of associated natural gas production, a gas and LNG market update from Rystad Energy Senior Analyst Masanori Odaka stated.
“As such, domestic gas prices remain in the sub-$3.00 per MMBtu [million British thermal units] region, albeit observing some material improvement in recent weeks, with Henry Hub prompt month hovering near $2.70 per MMBtu, as of 20 May, due to surplus production, muted domestic demand, and limited export capacity,” the update, which was sent to Rigzone, added.
The update noted that the latest U.S. Energy Information Administration (EIA) report indicates a slightly smaller than expected 70 billion cubic feet increase in natural gas inventories for the week ending May 10. It highlighted that storage facilities currently hold over 2.6 trillion cubic feet of gas, “with stocks up 17.5 percent year on year and 30.8 percent above the five-year average”.
Rystad’s update also pointed out that there has been an increase in gas flows to LNG export plants, “notably with Freeport LNG in Texas back online after maintenance”. As of May 20, total U.S. LNG exports averaged 12.3 billion cubic feet per day, the update highlighted.
“With Freeport LNG contributing nearly two billion cubic feet per day, we estimate LNG exports are up 5.8 percent compared to April levels,” the update stated.
Gas Consumption
The Rystad update noted that total gas consumption…
