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Is US Natural Gas Consumption Trending Higher?

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Weekly US natural gas consumption 

PointLogic, a market intelligence company, estimates that US natural gas consumption increased ~4% to 57.5 Bcf per day on May 10–16. The consumption also increased ~1.2% or by 0.7 Bcf per day YoY.

The YoY rise in natural gas consumption is due to higher consumption from the power sector, which bodes well for natural gas prices and reflects a structural rise in natural gas consumption.

According to the EIA, the monthly US natural gas consumption hit a record high of 110.5 Bcf per day in January. US natural gas prices have increased ~74.4% since March 3, 2016, partly due to the rising demand and exports. The United States Natural Gas ETF (UNG) aims to track active natural gas futures. UNG has increased ~0.4% since March 3, 2016.

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The First Trust Natural Gas ETF (FCG) has increased ~22.2% during the same period. FCG seeks to track the performance of companies mainly involved in natural gas exploration and production. Enerplus (ERF), Encana (ECA), and Continental Resources (CLR) account for ~13.1% of FCG’s holdings. These stocks have increased ~273.3%, ~182.7%, and ~168.5%, respectively, since March 3, 2016. These stocks have been the top percentage gainers in FCG’s holdings since March 3, 2016.

US natural gas consumption estimates 

US natural gas consumption averaged 74.22 Bcf per day in 2017. The EIA estimates that US natural gas consumption could average ~79.06 Bcf per day in 2018 and ~79.39 Bcf per day in 2019. The annual US natural gas consumption average would hit a new record in 2018 and 2019 if these projections are achieved.

Impact 

If the EIA’s production and consumption projections are achieved, US natural gas production could exceed the consumption in 2018, which could weigh on natural gas prices. However, an increase in exports could limit the impact of oversupply.

Next, we’ll discuss US natural gas price forecasts.

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