Yahoo Finance Analyzing US Natural Gas Consumption in 2016
Natural Gas Market: Key Factors that Drive Natural Gas Prices
US natural gas consumption
US natural gas consumption fell by 1.8% for the week ended April 27, 2016, compared with the previous week. In contrast, natural gas flows to the power plants increased by 0.9% for the same period. This is 5.3% higher than the same period in 2015.
Natural gas deliveries to the industrial sector fell by 1.2% for the week ended April 27, 2016, compared with the previous week. Natural gas flows to residential and commercial segments also fell by 4.7% for the same period. Natural gas consumption dropped due to milder-than-normal weather. You can read more about the weather’s impact on natural gas in Part 1 of this series.
EIA’s natural gas consumption forecast
The EIA (U.S. Energy Information Administration) forecasts that US natural gas consumption could average 76.2 Bcf (billion cubic feet) per day and 77.4 Bcf per day in 2016 and 2017. Natural gas consumption is estimated to rise by 3.9% in the electric power sector in 2016. Then, it could fall by 1.3% in 2017 due to the increase in natural gas prices. For more on natural gas price forecast, please read the next part of this series.
Natural gas consumption would also be driven by the rise in demand from the industrial sector in 2017. New projects coming online in the fertilizer and chemical sectors could also drive the demand.
Impact on energy stocks and ETFs
The volatility in natural gas prices affects the margins of oil and gas producers like EXCO Resources (XCO), Breitburn Energy (BBEP), Kosmos Energy (KOS), and Range Resources (RRC). It also impacts funds like the VelocityShares 3x Long Natural Gas ETN (UGAZ), the PowerShares DWA Energy Momentum Portfolio ETF (PXI), the Direxion Daily Natural Gas Related Bull 3X Shares ETF (GASL), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).
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