Record-high production, combined with lackluster demand and a robust storage report, put pressure on gas futures Friday.
As of 10:53 am EDT (1453 GMT), the June contract was trading at $2.703/MMBtu, down 2.3 cents from Thursday's $2.702/MMBtu settle. It was the third straight day the June contract fell, following a $2.802/MMBtu high Monday.
Production hit an all-time high of 79.1 Bcf/d Thursday and while Friday's forecast was expected to fall 700 MMcf/d to 78.4 Bcf/d, it was still 1 Bcf/d above the 2018 average of 77.4 Bcf/d, according to S&P Global Platts Analytics.
Production in 2018 is also running 8.9% above 2017. Last year at this time, some 71.1 Bcf/d was pulled from wells, down 6.3 Bcf/d than this year.
Those production levels look to be sustainable as well. Platts Analytics saw Saturday production at 78.5 Bcf/d, with an average extraction from wells at 78.6 Bcf/d over the next two weeks.
The hefty production numbers also come when Canadian imports are elevated. Friday's imports looked to total 5.9 Bcf/d. Over the last week, an average of 5.5 Bcf/d has moved south from Canada.
Demand was on the wane heading into the weekend, with consumption at 61.2 Bcf/d Friday, 1.9 Bcf/d below Thursday's 63.1 Bcf/d. Saturday's demand was forecast to be even lower, at 60.4 Bcf/d.
Looking ahead, demand looks to tick up over the next two weeks, averaging 63.1 Bcf/d.
But the rise in demand is likely to only be a drop in the bucket. With total supply -- production plus imports -- forecast to be 84.05 Bcf/d, that leaves a surplus of 20.95 Bcf/d, which points to substantial storage builds over the next two weeks.
This follows a bearish US Energy Information Administration storage report for the week that ended April 27, which showed a 62 Bcf build to total 1.343 Tcf in stocks.
