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Why US Natural Gas Prices Could Rise in 2018

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Hedge funds 

The CFTC (U.S. Commodity Futures Trading Commission) is scheduled to release its weekly “Commitment of Traders” report on September 15.

In its previous report, the CFTC reported that hedge funds increased their net bullish positions in US natural gas futures and options contracts by 10,785 contracts to 80,097 between August 29 and September 5. It suggests that hedge funds are bullish or less bearish on natural gas (UNG)(FCG)(GASL)(DGAZ) prices. However, hedge funds’ net bullish positions in US natural gas futures and options rose for only the second time in the last five weeks.

Changes in natural gas prices can impact oil and gas producers’ earnings such as Cimarex Energy (XEC), Rex Energy (REXX), WPX Energy (WPX), and EQT (EQT). For more on natural gas prices and drivers, read Part 1 of this series.

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US natural gas price forecasts  

The EIA (U.S. Energy Information Administration) released its “Short-Term Energy Outlook” (or STEO) report on September 12. It estimates that US natural gas prices could average $3.05 per MMBtu in 2017—0.3% lower than previous estimates from the August STEO report.

The EIA also estimates that prices could average $3.29 per MMBtu in 2018, the same as the previous estimate. Natural gas prices could rise in 2018 due to the rise in natural gas exports and a rise in domestic natural gas consumption.

US natural gas prices averaged $2.51 per MMBtu in 2016 and $2.63 per MMBtu in 2015.

The World Bank estimates that prices could average $3.17 per MMBtu in 2017 and $3.60 per MMBtu in 2018.

For some crude oil price forecasts, see Why Were Crude Oil Price Forecasts Downgraded Again?.

Also see How Irma, OPEC, the Dollar, and Rigs Are Driving Crude Oil Futures and Harvey’s Impact on US Supply, Demand, Crude Oil, and Gas to learn more.

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