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US Natural Gas Consumption Fell in the Week Ending September 28

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Sep. 30 2016, Published 8:32 a.m. ET

Weekly US natural gas consumption  

Market data provider PointLogic reported that US natural gas consumption fell 2% from September 22–28, 2016. It was a key bearish driver for natural gas prices.

Lower natural gas prices have a negative impact on oil and gas producers’ profitabilities such as Cimarex Energy (XEC) and Kosmos Energy (KOS).

Gas flows to the power sector fell 7.8% week-over-week, but rose 11% YoY (year-over-year). To learn about what drives the power sector’s natural gas consumption, read Part 1 of this series. Gas deliveries to the residential and commercial segments rose week-over-week, but fell YoY. Gas flows to the industrial sector rose week-over-week, but fell YoY.

Gas exports to Mexico rose 2.9% to 3.5 Bcf per day week-over-week and 6% YoY. US natural gas consumption rose 1.2%—compared to the same period in 2015.

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US natural gas consumption estimates 

The EIA (U.S. Energy Information Administration) estimated that US natural gas consumption could average 76.4 Bcf (billion cubic feet) per day in 2016 and 77.1 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’s demand could fall in 2017 due to higher natural gas prices. Demand from the industrial and residential segments could drive the 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 such as Kosmos Energy (KOS), Cimarex Energy (XEC), and Memorial Resources (MRD). 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 impact funds such the Direxion Daily Natural Gas Related Bull 3X Shares ETF (GASL), the United States Natural Gas ETF (UNG), 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.

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