Daily cash prices at Henry Hub have fallen and prompt-month (September) futures have even slipped to about $4 per MMBtu during the past week. Warm temperatures and corresponding power generation loads and relatively light storage injections have been offset by strong domestic production and few weather related supply disruptions so far this summer.
Now the cooling loads will begin to decline as the country transitions to September. Compared to last year at this time domestic dry gas production is up by more than 7 percent, shale-based production has reached 18 Bcf per day (Lippman Consulting) and now accounts for about 29 percent of all U.S. production and all of this has happened with a smaller gas-directed rig count than one year ago.
Even with significantly above normal cooling degree day counts this summer and relatively high crude prices, natural gas acquisition costs (as noted above) have fallen. “Who’da thunk it!” – my mother used to say.
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