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How Does US Natural Gas Consumption Impact Prices?

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Weekly US natural gas consumption 

PointLogic reported that US natural gas consumption fell 9% from January 19–25, 2017, and 26% compared to the same period in 2016. The fall in consumption is bearish for natural gas (FCG) (BOIL) (DGAZ) (UGAZ) prices. For more on what drives consumption, read Part 2 of this series.

Lower natural gas prices can have a negative impact on oil and gas producers’ profitability such as Cabot Oil & Gas (COG), Cimarex Energy (XEC), Southwestern Energy (SWN), and Kosmos Energy (KOS). For more on natural gas prices, read Part 1 of this series.

Natural gas deliveries to the power sector fell week-over-week and YoY (year-over-year). Gas flows to the residential and commercial segments fell week-over-week and YoY. Natural gas flows to the industrial sector also fell week-over-week and YoY.

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US natural gas consumption estimates  

The EIA (U.S. Energy Information Administration) 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. For updates on natural gas production, read the previous part of this series.

Read US Natural Gas Consumption: Bullish or Bearish for Prices? for details on monthly natural gas consumption and exports.

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 Cabot Oil & Gas (COG), Cimarex Energy (XEC), Southwestern Energy (SWN), and Kosmos Energy (KOS).

In the final part of this series, we’ll look at some natural gas price forecasts.

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