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US Natural Gas Futures Near 3-Week High: What’s Next?

PART:
1 2 3 4 5 6
Part 5
US Natural Gas Futures Near 3-Week High: What’s Next? PART 5 OF 6

Will US Natural Gas Production and Consumption Pressure Prices?

Weekly US natural gas production 

Market data provider PointLogic estimates that weekly US dry natural gas production rose 0.5% to 73.2 Bcf (billion cubic feet) per day between August 3 and August 9, 2017. US dry natural gas production has risen 1.9 Bcf per day, or 2.6%, year-over-year.

The EIA (Energy Information Administration) estimates that monthly US dry natural gas production hit a ten-month high. High production has a negative impact on natural gas (FCG) (GASL) (UNG) prices. Lower natural gas prices have a negative impact on the profitability of natural gas producers like Southwestern Energy (SWN), WPX Energy (WPX), Gulfport Energy (GPOR), and Rice Energy (RICE).

Will US Natural Gas Production and Consumption Pressure Prices?

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EIA’s natural gas production estimates 

The EIA released its Short-Term Energy Outlook report on August 8, 2017. It estimates that US dry natural gas production will average 73.5 Bcf per day in 2017, which is 0.2% higher than previous estimates. The EIA also estimates that US dry natural gas production will average 77.3 Bcf per day in 2018, which is 1.2% higher than previous estimates. The upward revision of US natural gas production figures could weigh on natural gas (UGAZ) (DGAZ) prices.

Production was 74.1 Bcf per day and 72.3 Bcf per day in 2015 and 2016, respectively. In 2016, production fell for the first time since 2005.

Weekly US natural gas consumption  

PointLogic estimates that weekly US natural gas consumption fell 0.8% to 72.3 Bcf per day between August 3 and August 9, 2017. It also fell 2.4% from the same period in 2016. The mild weather led to the fall in natural gas consumption. The EIA estimates that monthly US natural gas consumption hit a two-year low. The fall in natural gas consumption is bearish for natural gas (BOIL) (GASL) prices.

US natural gas consumption estimates  

The EIA estimates that US natural gas consumption will average 72.6 Bcf per day in 2017, which is 0.3% lower than previous estimates. The EIA also estimates that US dry natural gas consumption will average 75.8 Bcf per day in 2018, which is 0.3% higher than previous estimates.

US natural gas consumption averaged 75.1 Bcf per day in 2016 and 74.7 Bcf per day in 2015.

Impact  

Production could surpass consumption in 2017 and 2018, which would pressure natural gas prices. In the next part of this series, we’ll take a look at some natural gas price forecasts and moving averages.

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