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US Weather Could Drive Natural Gas Demand

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Natural gas prices 

US natural gas (DGAZ) (BOIL) futures contracts for September delivery were trading flat at $2.96 per MMBtu (million British thermal units) in electronic trading at 1:45 AM EST on July 28, 2017. Prices are near a four-month low.

The United States Natural Gas ETF (UNG) follows US natural gas futures. It’s also near a four-month low. It rose 1.4% to 6.64 on July 27, 2017. It has fallen 29% YTD (year-to-date). However, US natural gas futures have fallen 16.5% YTD due to mild weather and oversupply.

Lower natural gas prices have a negative impact on natural gas producers like EQT (EQT), Southwestern Energy (SWN), Rex Energy (REXX), and Newfield Exploration (NFX).

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Weather forecasts  

The EIA (U.S. Energy Information Administration) estimates that electricity generation will use less natural gas this summer—compared to the previous summer. However, US natural gas would have the highest share in electricity generation. US natural gas would have a share of 34% compared to 32% coal of for electricity generation this summer.

Weather forecasting agencies predict that the weather will be mild in the eastern parts of the US next week. However, warmer-than-normal temperatures are expected in the southern parts of the US next week. Around two-thirds of the US will likely experience warm weather next week. Warmer weather would support natural gas demand. Natural gas is used for electricity generation—air conditioners.

More than 50% of US households use natural gas for heating and cooling purposes. As a result, it would help natural gas (GASL) (FCG) prices. Moves in natural gas prices impact natural gas producers like Rex Energy (REXX) and Newfield Exploration (NFX).

Natural gas demand is usually high during this time of the year. Changes in the weather influence US natural gas inventories.

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