US Natural Gas Consumption Hit a 2-Year Low
Monthly US natural gas consumption
According to EIA (U.S. Energy Information Administration) estimates, monthly US natural gas consumption fell by 0.92 Bcf (billion cubic feet) per day to 62.6 Bcf per day in May 2017—compared to the previous month. Consumption is at a two-year low.
Consumption fell by 1.5% week-over-week and 3.02 Bcf per day or 4.6% YoY (year-over-year). Mild weather led to the fall in natural gas consumption. The fall in natural gas consumption is bearish for natural gas (UGAZ) (DGAZ) (UNG) prices.
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Weekly US natural gas consumption
US natural gas consumption fell 3.2% on July 27–August 2, 2017. It also fell 6.5% from the same period in 2016.
US natural gas consumption estimates
The EIA estimates that US natural gas consumption will average 72.86 Bcf per day in 2017 and 75.6 Bcf per day in 2018. US natural gas consumption averaged 75.1 Bcf per day in 2016 and 74.7 Bcf per day in 2015.
The following factors could drive consumption:
- a rise in the use of liquefied natural gas
- a rise in natural gas exports to Mexico
- replacing old and outdated coal-fired power plants with natural gas–based power plants
- a rise in demand from industrial projects
Lower consumption in 2017 could pressure natural gas prices. Production could surpass consumption in 2017. However, long-term fundamentals suggest that consumption could rise, which would benefit natural gas prices. The EIA estimates that US natural prices could average $3.10 per MMBtu in 2017. For more on the natural gas price forecast, read Hedge Funds’ Net Long Positions on US Natural Gas Rose.
Read Are Crude Oil Futures Trading Close to Resistance Level? to learn more about crude oil price forecasts.