US natural gas consumption
The EIA (U.S. Energy Information Administration) estimated that monthly US natural gas consumption fell by 3.6 Bcf (billion cubic feet) per day to 62 Bcf per day in October—compared to the previous month. Consumption fell 5.5% month-over-month and 3.6% YoY (year-over-year). The fall in consumption is bearish for natural gas prices.
Gas exports to Mexico
Natural gas deliveries to Mexico were flat at 3.8 Bcf per day from November 10–16, 2016. They rose 27% YoY. However, Donald Trump said that he would tear up the trade policy with Mexico and build a wall to curb illegal immigration. It could hamper natural gas exports. If Trump implements these policies, it would curb supplies to Mexico and pressure natural gas prices in the US.
US natural gas consumption estimates
The EIA forecast that US natural gas consumption could average 75.6 Bcf (billion cubic feet) per day in 2016 and 75.9 Bcf per day in 2017. US natural gas consumption averaged 74.8 Bcf per day in 2015. For updates on natural gas production, read the previous part of this series.
Meanwhile, demand from the industrial and residential segments could drive the demand for natural gas in 2017. Rising demand should support natural gas prices.
High natural gas prices can have a positive impact on oil and gas producers’ earnings such as Range Resources (RRC), Cimarex Energy, WPX Energy, Southwestern Energy, and Kosmos Energy.
Moves in crude oil and natural gas prices impact funds such as the Direxion Daily Natural Gas Related Bull 3X ETF (GASL), the Direxion Daily Energy Bear 3x ETF (ERY), the United States Natural Gas ETF (UNG), the VelocityShares 3x Inverse Natural Gas ETN (DGAZ), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the United States Oil ETF (USO), the VelocityShares 3x Long Crude Oil ETN (UWTI), and the Vanguard Energy ETF (VDE).
Read Winter Weather and Inventories Could Impact Natural Gas Prices, Winners and Losers in Energy after the US Election Results, and Will Crude Oil Prices Test 3 Digits Again? for more on natural gas and crude oil price forecasts.
For related analysis, visit Market Realist’s Energy and Power page.