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World Bank: US Natural Gas Prices Could Trade Higher in 2017

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High inventories  

US natural gas inventories are 16.4% more than their five-year average. High natural gas inventories could keep a lid on US natural gas prices. For more on US natural gas prices, read Part 2 of the series. Seasonal weather conditions would have a short-term impact on natural gas prices due to the change in the demand for natural gas. For more on weather, read Part 1 of this series.

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US natural gas price forecast 

In its July report, World Bank forecast that US natural gas prices will average $2.30 per MMBtu (million British thermal units) in 2016, $3.00 per MMBtu in 2017, and $3.50 per MMBtu in 2018.

JJ Woods Associates estimates that US natural gas could go as high as $3.05 per MMBtu before the end of the summer. Summer is expected to end in the next four weeks. The Price Futures Group estimated that $3 per MMBtu might be the upper limit for US natural gas prices in 2016.

A rise in natural gas prices has a positive impact on oil and gas producers’ earnings such as Range Resources (RRC) and Cimarex Energy (XEC).

It also impacts funds such as the Direxion Daily Natural Gas Related Bull 3X Shares ETF (GASL) and the United States Natural Gas ETF (UNG).

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

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