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US Natural Gas Production Could Pressure Prices in 2018

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Weekly US natural gas production  

According to PointLogic, US dry natural gas production fell 3.7% to 74 Bcf (billion cubic feet) per day between December 28, 2017, and January 3, 2018. However, production rose 4.5% from a year ago.

Natural gas prices (UGAZ) (DGAZ) fell ~20% in the last 12 months due to excess supply. Higher crude oil (USO) prices will also increase natural gas supplies. Reuters estimates that dry natural gas production in the lower 48 states of the US could fall this week. Any decline in natural gas production is bullish for natural gas (UNG) prices.

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Weekly US natural gas consumption  

US natural gas consumption rose 26% to 119.8 Bcf per day between December 28, 2017, and January 3, 2018, according to PointLogic. Consumption also rose 56% year-over-year. Consumption hit 150.7 Bcf per day on January 1, 2018, and surpassed the previous single-day record set in 2014, according to PointLogic. Cold weather led to record natural gas consumption. Any rise in consumption has a positive impact on natural gas (DGAZ) prices.

Reuters estimates that US natural gas consumption will rise this week and fall next week. Changes in consumption impact natural gas (UNG) prices. Moves in oil and natural gas (BOIL) prices impact energy producers’ (IXC) (FXN) earnings like Cabot Oil & Gas (COG), EQT (EQT), EXCO Resources (XCO), and Ultra Petroleum (UPL).

Impact  

The EIA estimates that US natural gas production could average 79.7 Bcf per day in 2018. It also forecast that US natural gas consumption could average 76.9 Bcf per day in 2018. Production could exceed consumption in 2018, which would weigh on natural gas (FCG) (BOIL) prices. However, a rise in exports could limit the impact of oversupply.

Next, we’ll discuss the most important catalysts for natural gas prices this week.

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