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US Natural Gas Consumption Could Rise over the Long Term

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Weekly natural gas consumption 

The US natural gas consumption fell by 5% for the week ending March 30, 2016—compared to the previous week. Gas deliveries to the industrial sector fell by 1.9% for the same period. Gas flows to the power sector also fell by 3.4% for the same period. Natural gas consumption declined due to fewer gas deliveries to the residential and commercial segments. Consumption fell due to the mild weather compared to normal weather most of the week. Production and consumption are key catalysts for natural gas prices. You can read more about natural gas production in Part 4 of this series.

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US natural gas consumption forecast 

In its March Short-Term Energy Outlook report, the EIA forecast that US natural gas consumption could average 76.7 Bcf (billion cubic feet) per day in 2016 and 77.3 Bcf per day in 2017. The rise in consumption would be driven by the industrial sector. In this sector, natural gas consumption is estimated to rise by 2.9% in 2016 and 2.2% in 2017. The estimates of stable demand from the residential and commercial segments will also likely benefit natural gas consumption in 2017. New projects in the fertilizer and chemical sectors will also drive the demand.

The volatility in natural gas prices impacts natural gas producers like EV Energy (EVEP), Breitburn Energy (BBEP), Cimarex (XEC), Kosmos Energy (KOS), and QEP Resources (QEP). It also impacts ETFs like the VelocityShares 3x Long Natural Gas ETN (UGAZ), the PowerShares DWA Energy Momentum Portfolio (PXI), and the Fidelity MSCI Energy ETF (FENY).

Next, we’ll look at the latest natural gas price forecasts.

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