Weekly US natural gas consumption
PointLogic reported that US natural gas consumption rose by 1.6% from August 11–17, 2016. Gas consumption rose for the eighth time in the last 11 weeks. This is a key bullish driver for natural gas prices.
Higher natural gas prices have a positive impact on the profitability of oil and gas producers like Cimarex Energy (XEC) and Memorial Resources (MRD). Gas flows to the power sector rose by 4.4% week-over-week and by 10.8% YoY (year-over-year). To learn about what drives the power sector’s natural gas consumption, read part one in this series.
Gas deliveries to the residential and commercial segment fell week-over-week and YoY. Gas flows to the industrial sector were flat week-over-week, but they fell by 0.5% YoY.
Gas exports to Mexico were flat week-over-week, but they rose by 12.5% YoY. US natural gas consumption is up by 5% compared to the corresponding period in 2015.
US natural gas consumption estimates
The EIA reported that US natural gas consumption could average 76.3 Bcf (billion cubic feet) per day in 2016 and 77.2 Bcf per day in 2017.
The rise in demand from the electric power sector could drive the demand for natural gas in 2016. However, the power sector demand could fall in 2017 due to higher natural gas prices. However, demand from the industrial and residential segments could drive demand for natural gas in 2017.
High demand should support natural gas prices. High natural gas prices have a positive impact on oil and gas producers’ earnings like Cimarex Energy (XEC), Memorial Resources (MRD), and Kosmos Energy (KOS). Check out the last part of this series for a discussion on natural gas price forecasts.
The ups and downs in oil and gas prices can impact funds such as the United States Natural Gas ETF (UNG), the Direxion Daily Natural Gas Related Bull 3X Shares ETF (GASL), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), and the PowerShares DWA Energy Momentum ETF (PXI).
In the next part of this series, we’ll take a look at the U.S. Commodity Futures Trading Commission’s “Commitment of Traders” report.