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Will US Natural Gas Consumption Drive Prices?

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EIA’s: US natural gas consumption  

US natural gas consumption rose by 7.3 Bcf (billion cubic feet) per to 70.37 Bcf per day in July 2017 compared to August 2017. Consumption rose 12% month-over-month but was down 2.7 Bcf per day or 3.7% from the same period in 2016. Consumption was at its highest level since March 2017.

The year-over-year fall in consumption is bearish for natural gas (UNG)(GASL)(BOIL) prices. Moves in natural gas prices impact gas exploration and production companies (FXN)(FENY) like Exco Resources (XCO) and Antero Resources (AR).

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Weekly US natural gas consumption  

US natural gas consumption rose 7.4% to 56.5 Bcf per day from October 5 to 11. Consumption also rose 5.6% year-over-year. The rise in consumption in the power, residential, and commercial sectors led to a rise in natural gas consumption during this period.

EIA US natural gas consumption estimates 

The EIA released its STEO (“Short-Term Energy Outlook”) report on October 11. It estimates that US natural gas consumption would average 73.1 Bcf per day in 2017—0.6% higher than the estimates from the September STEO report. The EIA also estimates that US natural gas consumption would average 76.8 Bcf per day in 2018 —1.4% higher than the estimates from the September STEO report. 

Consumption averaged 74.6 Bcf per day in 2015 and 75.1 Bcf per day in 2016.

Impact 

US natural gas supplies could outstrip consumption in 2017 and 2018, leading to oversupply and weighing on natural gas (FCG)(UGAZ)(DGAZ) prices. However, a rise in exports could limit the impact of oversupply.

Next in this series, we’ll take a look at some natural gas price forecasts.

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