Natural Gas News: Futures Rally as EQT Announces Production Cuts

EQT Production Cuts Trigger Market Surge

EQT’s decision to cut production by an estimated 30 to 40 bcf in Q1 responds to declining natural gas prices amidst record production levels, reaching 118.2 bcfpd in December. This move, announced alongside a 5% price surge, coincides with EQT’s downward revision of its 2024 production forecast by about 50 bcfe, underscoring market challenges.

Industry Response

Chesapeake Energy, set to become the largest U.S. gas producer post-merger with Southwestern Energy, also slashed its 2024 production plans by approximately 30% due to the price plunge. Similarly, other energy firms like Antero Resources and Comstock Resources announced plans to reduce drilling activities this year.

Market Trends

U.S. gas drillers have reduced operating rigs by 26% over the past year, particularly in the Haynesville and Marcellus/Utica shale regions. Additionally, oilfield service companies have slowed hiring, with job losses reaching 4,680 since December.

Short-term Forecast: Cautiously Bullish Outlook for Natural Gas

Amidst the recent announcement of production cuts by EQT, the short-term outlook for natural gas leans cautiously bullish. Despite bearish fundamentals, including ample storage and steady production, the market’s response to EQT’s decision triggered a surge in prices, indicating potential resilience.

Technical Analysis

A bullish news catalyst is driving natural gas prices sharply higher on Monday, putting the market in a position to challenge the downtrending 50-day moving average at $2.672. A trade through this moving average will change the intermediate trend to up.

Because of the prolonged downtrend, we expect to see renewed selling pressure on the intial test of the 50-day MA, but traders should watch for a potential breakout to the upside should this level be violated with conviction. (This means really buying and not just short-covering.