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US Natural Gas Consumption: Bullish or Bearish for Prices?

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Nov. 20 2020, Updated 1:23 p.m. ET

US natural gas consumption 

The EIA (U.S. Energy Information Administration) estimated that monthly US natural gas consumption rose by 19 Bcf (billion cubic feet) per day to 91 Bcf per day in December 2016—compared to the previous month. Consumption rose 27% month-over-month and 9% YoY (year-over-year). The YoY rise in consumption is bullish for natural gas (UNG) (DGAZ) (UGAZ) (FCG) (BOIL) prices. For more on natural gas prices, read Part 1 and Part 2 of this series.

Higher natural gas prices can have a positive impact on oil and gas producers’ profitability such as Cimarex Energy (XEC), Southwestern Energy (SWN), and Kosmos Energy (KOS).

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US natural gas exports

The US has become a net exporter of natural gas for the first time in 60 years. According to S&P Global Platts, the United States exported 7.4 Bcf per day of natural gas in November 2016. It imported 7.0 Bcf per day of natural gas for the same period.

The rise in exports could add to natural gas consumption and benefit US natural gas prices. US natural gas exports have risen more than 50.0% since 2010. Canada and Mexico are the main buyers.

US natural gas consumption estimates

The EIA estimates that US natural gas consumption could average 75.4 Bcf per day in 2017 and 76.9 Bcf per day in 2018. US natural gas consumption averaged 75.1 Bcf per day in 2016 and 74.7 Bcf per day in 2015. In 2017, natural gas consumption would be driven by higher residential and commercial consumption due to the cold winter. In 2018, higher electric power and industrial sector demand will support consumption. For updates on natural gas production, read the previous part of this series.

Impact of rising demand 

Rising demand should support natural gas prices. High natural gas prices can have a positive impact on oil and gas producers’ earnings such as Cimarex Energy (XEC) and Kosmos Energy (KOS).

Read What Can Investors Expect from the Natural Gas Market in 2017? for more on the natural gas market outlook in 2017.

For analysis on crude oil prices, read What Can Investors Expect in the Crude Oil Market in 2017? and US Election: How Will It Impact the Stock and Energy Markets. For some crude oil price forecasts, read Will Crude Oil Prices Test 3 Digits Again.

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

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