Yahoo Finance Will US Natural Gas Production Increase in 2016?
Natural Gas Market: Key Factors that Drive Natural Gas Prices
US natural gas production
US natural gas production fell by 0.3% between April 20–April 27, 2016. This is 2.6% lower than in the corresponding period in 2015. Production dropped due to the maintenance of natural gas pipelines in April 2016.
Natural gas imports from Canada also fell by 2.4% between April 20–April 27, 2016. In contrast, LNG (liquefied natural gas) imports rose by 2.2% for the same period. The total weekly natural gas supplies fell by 0.4% for the same period, which is 2% lower than in the corresponding period in 2015.
EIA’s natural gas production forecasts
The EIA (U.S. Energy Information Administration) forecasts that US natural gas production could average ~80.0 Bcf (billion cubic feet) per day and ~81.4 Bcf per day in 2016 and 2017, respectively. US natural gas production averaged 78.9 Bcf in 2015.
Technological advancement and improved productivity drove the rise in natural gas production, despite lower natural gas prices. Associated production with booming crude oil production was also a major reason for the rise in natural gas production in 2014 and 2015. For more on US crude oil production, please read How Did US Crude Oil Production Support Crude Oil Prices?
New pipelines coming online in the Marcellus and Utica Shale regions in 2016 and 2017 could also support the rise in natural gas production.
Limited upside
High natural gas production could limit the upside for natural gas prices. It will add to the natural gas inventories. For more on natural gas inventories, please read the second part of this series. Lower natural gas prices affect oil and gas producers like Ultra Petroleum (UPL), Gulfport Energy (GPOR), Newfield Exploration (NFX), and Memorial Resources (MRD).
The roller coaster ride in natural gas prices also impacts funds like the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the VelocityShares 3x Long Natural Gas ETN (UGAZ), and the PowerShares DWA Energy Momentum Portfolio ETF (PXI).
Now, let’s analyze natural gas consumption in 2016.
Browse this series on Market Realist:
