Yahoo Finance Did Weekly Natural Gas Production and Consumption Rise?
Natural Gas Prices Hit a 1-Month Low: Forecasts for 2016 and 2017
EIA’s natural gas production forecasts
Market intelligence company Point Logic reported that natural gas supplies fell by 0.3 Bcf (billion cubic feet) per day to 79.6 Bcf (billion cubic feet) per day during the week ending May 25, 2016, compared to the previous week. During the same period, net imports from Canada came in at 6 Bcf per day. The EIA (U.S. Energy Information Administration) forecasts that US natural gas production could average ~79.6 Bcf per day and ~81.3 Bcf per day in 2016 and 2017, respectively.
Improvement in technology and drilling techniques has led to a rise in productivity. This has led to a rise in natural gas production despite lower natural gas prices. Associated production and the rise in US crude oil production in 2014 and 2015 also led to the rise in natural gas production. For more on US crude oil production, read US Crude Oil Production Hits 20-Month Low: What’s Next? The new pipelines coming online in the Marcellus and Utica Shale regions will lead to a rise in US natural gas production in 2016 and 2017.
US natural gas consumption
Point Logic also reported that total natural gas consumption declined by 4% for the week ending May 25, 2016. Consumption declined due to mild weather. Consequently, gas deliveries to the residential and commercial sectors declined for the same period. Meanwhile, the EIA estimates that US natural gas consumption could average 76.5 Bcf per day in 2016 and 77.4 Bcf per day in 2017. The industrial and residential segments will drive demand in 2017. Demand from the electric power sector will drive demand in 2016.
Impact of natural gas production
The bullish trend in natural gas production could put pressure on natural gas prices. This will add to natural gas inventories. For more on natural gas inventories, read the second part of this series.
Multiyear-low natural gas prices affect oil and gas producers like EXCO Resources (XCO), Ultra Petroleum (UPL), and Memorial Resource Development (MRD). The ups and downs in oil and gas prices also influence ETFs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE) and the PowerShares DWA Energy Momentum Portfolio (PXI).
Read the next part of this series for the latest natural gas price forecast.
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