Natural Gas Production Hits An All-Time High, Precisely The Exact Opposite Outcome Bulls Want

Lower 48 gas production hit an all-time high this past weekend.

For a natural gas bull, this is the exact opposite scenario you wanted to see. With Henry Hub trading near $2.20/MMBtu, you would think gas production would be falling vs increasing, but that's not the reality.

As we have stated many times before, Lower 48 gas production this year won't fall despite lower prices. This is because most of the gas production is coming from US shale oil producers via associated gas production. With WTI still trading above $70/bbl and US shale oil producers bringing on tier 2 and tier 3 wells, we will see gassier wells, and thus, higher gas production.

This is one of the main reasons why we are not bullish on natural gas, and given where inventories are today, we will need power burn demand to bail out the market this summer to keep storage in check.