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EIA Upgrades US Natural Gas Consumption Forecasts for 2018

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Weekly US natural gas consumption

Market intelligence company Pointlogic estimates that US natural gas consumption fell ~0.9% to 57.3 Bcf (billion cubic feet) per day from June 7 to June 13. However, consumption increased ~4%, or by 2.2 Bcf per day YoY (year-over-year).

The YoY rise in natural gas consumption was due to rises in consumption in the residential, commercial, and power sectors.

US natural gas prices have risen ~81% since March 3, 2016, partly due to rising demand and exports. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has risen ~53% since March 3, 2016. XOP funds have exposure to energy companies involved in crude oil and natural gas exploration, production, drilling, refining, and marketing.

Resolute Energy (REN), Tellurian (TELL), Delek US Holdings (DK), and WPX Energy (WPX) account for 5.5% of XOP’s holdings. These stocks have risen 1,023%, 971%, 244%, and 241%, respectively, since March 3, 2016. These stocks were the top gainers in XOP’s portfolio during the same period.

US natural gas consumption estimates

US natural gas consumption averaged 74.2 Bcf per day in 2017. The EIA (U.S. Energy Information Administration) released its Short-Term Energy Outlook Report on June 12. It estimates that consumption could average ~79.6 Bcf per day in 2018, 0.6% higher than its May estimate. The EIA also expects consumption to average ~79.4 Bcf per day in 2019, the same as its previous estimate. The annual US natural gas consumption average could hit a new record in 2018 if these projections are achieved.

Impact 

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

Next, we’ll cover US natural gas exports.

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