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EIA Upgrades US Natural Gas Price Forecast for 2016 and 2017

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Natural gas inventories  

US natural gas inventories are 5.4% more than their five-year average. However, the surplus is shrinking. If the trend continues, the surplus could turn into a deficit—particularly if the winter is harsh. A harsh winter can cause prices to rise sharply. For more on US natural gas prices, read Part 1 of this series.

Higher natural gas prices have a positive impact on oil and gas producers’ earnings such as Gulfport Energy (GPOR) and Memorial Resources (MRD).

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EIA’s US natural gas price forecasts in October STEO report 

The EIA (U.S. Energy Information Administration) released its monthly STEO (Short-Term Energy Outlook) report on October 13, 2016. It reported that US natural gas prices would average $2.51 per MMBtu (million British thermal units) in 2016 and $3.07 per MMBtu in 2017. US natural gas prices are expected to average $3.03 per MMBtu 4Q16. Natural gas prices averaged $2.63 per MMBtu 2015.

EIA’s US natural gas price forecasts in September STEO report 

In its September STEO report, the EIA estimated that US natural gas prices would average $2.42 per MMBtu in 2016 and $2.87 per MMBtu in 2017.

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US natural gas price forecasts

World Bank forecast that US natural gas prices will average $2.30 per MMBtu in 2016, $3.00 per MMBtu in 2017, and $3.50 per MMBtu in 2018.

The International Monetary Fund forecast that US natural gas prices would average $2.3 per MMBtu in 2016, $3 per MMBtu in 2017, $3.1 per MMBtu in 2018, and $3.3 per MMBtu in 2019, respectively.

Aegent Energy Advisors estimates that US natural gas prices will trade below $3.27 per MMBtu from November 2016 to March 2017.

Impact

Higher natural gas prices have a positive impact on oil and gas producers’ earnings such as Gulfport Energy and Memorial Resources.

The rollercoaster ride in oil and natural gas prices also impacts funds such as the VelocityShares 3x Inverse Natural Gas ETN (DGAZ), the First Trust ISE-Revere Natural Gas ETF (FCG), and the Direxion Daily Natural Gas Related Bull 3X Shares ETF (GASL).

For more on the natural gas price forecast, read Winter Weather and Inventories Could Impact Natural Gas Prices.

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

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