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US Natural Gas Consumption Fell: Is It Bearish for Prices?

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Nov. 20 2020, Updated 1:49 p.m. ET

Weekly US natural gas consumption  

PointLogic reported that US natural gas consumption fell 10% from March 16–22, 2017. Consumption fell 5.5% from the same period in 2016. The fall in natural gas consumption is bearish for natural gas (UNG) (BOIL) prices. A fall in industrial, residential, and commercial consumption of natural gas from March 16–22, 2017, led to the fall in consumption for the same period. 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 EXCO Resources (XCO) and Kosmos Energy (KOS). For more on natural gas prices, read Part 1 of this series.

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Gas exports to Mexico  

Natural gas exports to Mexico fell 2.6% to 3.7 Bcf (billion cubic feet) per day from March 16–22, 2017—12.1% higher than the same period in 2016. On January 25, 2017, President Trump signed an order to build a wall between the US and Mexico to curb illegal immigration. It could hamper natural gas exports. It would curb supplies to Mexico and pressure natural gas prices in the US. 

US natural gas consumption estimates 

The EIA estimates that US natural gas consumption could average 73.65 Bcf per day and 76.6 Bcf per day in 2017 in 2018, respectively.

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.

Impact of slowing consumption 

The fall in consumption in 2017 could also pressure natural gas prices. Lower natural gas prices can have a negative impact on oil and gas producers’ earnings such as Newfield Exploration (NFX), Cimarex Energy (XEC), and Rex Energy (REXX).

Read Could Trump Impact US Natural Gas Production and Consumption for more on the natural gas market outlook in 2017. Also, read Hedge Funds Increase Bullish Bets on US Natural Gas for more on the natural gas price forecast.

Read What Can Investors Expect in the Crude Oil Market in 2017? and Russia’s Central Bank: Crude Oil Prices Could Hit $40 per Barrel for analysis on crude oil prices.

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

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