Consumption trends last week
Last week, total US natural gas consumption decreased by 1.7% week-over-week. Consumption declined in the residential and commercial sectors by 5.2%. Industrial consumption declined by 1.1%. Consumption for power generation increased by 0.7%.
Low natural gas consumption is bearish for natural gas prices. This hurts gas-weighted producers like Southwest Energy (SWN), ECA (ECA), Cabot Oil and Gas (COG), and EQT (EQT). All of these companies are part of the iShares Global Energy ETF (IXC). They account for 1.8% of IXC.
The EIA’s natural gas consumption forecasts for 2015
The EIA’s (U.S. Energy Information Administration) STEO (Short-Term Energy Outlook), released on April 7, forecasts that total natural gas consumption will average 76.3 Bcf/d (billion cubic feet per day) in 2015 and 75.8 Bcf/d in 2016—compared to an estimated 73.5 Bcf/d in 2014.
The increase in consumption would be a result of increased demand from the industrial and electric power sectors. Increased consumption would be positive for the companies mentioned above. Demand from the power sector is forecasted to grow by 11.5% in 2015. It’s expected to fall 2.2% in 2016.
Industrial consumption is forecasted to increase by 4.9% and 2.5% in 2015 and 2016, respectively, due to new industrial projects coming online—predominantly in the fertilizer and chemical sectors.
Demand from the residential and commercial sectors is projected to decline in 2015 and 2016.
To read Market Realist’s analysis of recent commodity prices and their effects on energy companies, visit our Energy and Power page.