Consumption trends last week
Last week, total US natural gas consumption declined by 10.8% week-over-week. Consumption fell by over 30%, compared to the week before, in the residential and commercial sectors. Industrial consumption fell by 3.4%. Consumption for power generation increased by 0.6%.
Lower natural gas consumption is bearish for natural gas prices. This is negative for gas producers like Enerplus (ERF), Southwest Energy (SWN), Range Resources (RRC), and Antero Resources (AR). Southwest Energy and Range Resources are part of the iShares Global Energy ETF (IXC). They account for ~0.7% of IXC.
The EIA’s forecasts for 2015
The EIA’s (U.S. Energy Information Administration) STEO (Short-Term Energy Outlook) was released on April 7. It 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 companies that produce natural gas. Demand from the power sector is forecasted to grow by 11.5% in 2015. Then, 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—mainly in the fertilizer and chemical sectors.
The demand from the residential and commercial sectors is projected to decline in 2015 and 2016.
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