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Natural Gas: OPEC’s Meeting Could Impact Supply and Demand

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Weekly US natural gas production estimates

US natural gas production rose by 0.3 Bcf (billion cubic feet) per day to 75.9 Bcf per day on November 9–15, 2017. Production rose 0.4% week-over-week and by 5 Bcf per day or 7.1% YoY (year-over-year). Any rise in US dry natural gas production is bearish for natural gas (UNG) (UGAZ) prices.

US natural (GASL) (BOIL) gas prices have fallen ~17% year-to-date partially due to high gas production. Lower gas prices have a bearish impact on oil and gas producers’ (IEO) (FXN) profitability like WPX Energy (WPX), Newfield Exploration (NFX), Cabot Oil & Gas (COG), and Rice Energy (RICE).

Weekly US natural gas consumption estimates

PointLogic estimates that US natural gas consumption rose by 9.4 Bcf per day to 75.2 Bcf per day on November 9–15, 2017. Consumption rose 14.2% week-over-week and by 11.7 Bcf per day or 18.4% YoY. Any rise in consumption has a positive impact on natural gas (BOIL) (DGAZ) (UNG) prices.

OPEC’s meeting 

OPEC’s biannual meeting will be held on November 30, 2017. US crude oil (USO) (UCO) prices have risen ~30% since the lows in June 2017—partially due to ongoing production cuts. For more updates on OPEC’s meeting, read Will Russia and OPEC Help Crude Oil Bears. Higher oil prices could drive US natural gas supplies.

EIA’s US supply and demand forecasts

The EIA expects that US gas production will average 78.9 Bcf per day in 2018. It also estimates that US gas consumption will average 76.8 Bcf per day in 2018.

Impact 

US natural gas production could surpass the demand in 2018, which would weigh on gas (UGAZ) (UNG) prices. However, a rise in exports could limit the impacts of oversupply.

In the next part, we’ll discuss some natural gas price forecasts.

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