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The EIA Upgrades US Natural Gas Forecast for 2016

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Nov. 20 2020, Updated 3:52 p.m. ET

High inventory 

US natural gas inventories are 22.1% higher than their five-year average. High natural gas inventories could pressure natural gas prices. Secondly, seasonal weather conditions would have a short-term impact in natural gas prices.

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US natural gas price forecast

The EIA (U.S. Energy Information Administration) released its monthly Short-Term Energy Outlook report on July 12, 2016. It forecasts that US natural gas prices will average $2.43 per MMBtu in 2016 and $3.04 per MMBtu in 2017.

The EIA forecasted that US natural gas prices will average $2.29 per MMBtu in 2016 and $3.05 per MMBtu in 2017 in its June Short-Term Energy Outlook report.

The World Bank forecasts that US natural gas prices will average $2.50 per MMBtu in 2016 and $3.00 per MMBtu in 2017 due to high inventories.

Aegent Energy Advisors estimates that US natural gas prices may not exceed $3.20 per MMBtu in August 2016. They may also not exceed $3.20 per MMBtu from August to October 2016. Prices are expected to trade below $3.61 per MMBtu from November 2016 to March 2017.

The roller coaster ride in natural gas prices affects oil and gas exploration and production companies such as Memorial Resource Development (MRD), Cimarex Energy (XEC), and Rex Energy (REXX).

They also impact funds such as the VelocityShares 3x Inverse Natural Gas ETN (DGAZ) and the PowerShares DWA Energy Momentum ETF (PXI).

For related analysis, you can visit Market Realist’s Energy and Power page.

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