Pipeline Meter

The availability of pipeline flow data makes the U.S. natural gas market uniquely positioned to grasp with reasonable accuracy where it stands with regional or national supply and demand on a daily basis. If you understand how to wrangle and finesse this robust data source, you can make a pretty good estimate of where the supply is, where it is headed, how it’s being consumed, and ultimately, what that all means for prices. Today we wrap up our series on natural gas production estimates and how the industry uses pipeline flow data to track gas production trends in real time.

In all sorts of commodity markets, buyers and sellers would give their eye-teeth to have access to accurate daily supply and demand data.  Access to such data would provide insight into the utilization of transportation assets, transportation patterns and ultimately --- the holy grail of commodity markets – price.  What if there was a commodity market where you could know supply and demand on a daily basis?  Well there is.  And it is the natural gas market.  Gas market analysts have access to the luxury of pipeline flow data that (in the right hands) provides reasonably accurate estimates of daily supply (including production) and demand. In today’s blog, we explain how the natural gas industry uses flow data to track gas production trends in real time.

On Tuesday of this week the Energy Information Administration released its latest Drilling Productivity Report, projecting declines in US natural gas production volumes. Meanwhile, daily pipeline flow data shows gas production hitting record highs and gas storage fill could also be heading toward maximum levels.  The CME/NYMEX Henry Hub natural gas price for the November 2015 is responding to these burgeoning supplies, settling yesterday at $2.518/MMBtu, near all-time lows for this time of year. Today we continue our look at the various sources of natural gas production data and what they tell us.