Strong Permian Basin production of oil and, by extension, associated gas continues to propel supplies in West Texas and depress prices in the region.

Natural gas production nationally reached record levels around 107 Bcf/d early this year, according to Wood Mackenzie estimates. But leading exploration and production (E&P) companies, including Chesapeake Energy Corp. and EQT Corp., have recently eased output in basins outside of the Permian. Total production this month declined to lows close to 101 Bcf/d as a result.

However, with global oil consumption high relative to supply and Permian producers powering ahead to meet demand, American crude output has hovered near record levels of 13.3 million b/d. Natural gas production in the Permian has hung around 20 Bcf/d and near...