Will US Natural Gas Prices Rise in 2016 and 2017?

Natural Gas Prices Hit a 1-Month Low: Forecasts for 2016 and 2017

(Continued from Prior Part)

Supply and demand balance

The EIA (U.S. Energy Information Administration) forecasts that natural gas supply will outstrip demand by 3.2 Bcf (billion cubic feet) per day in 2016 and by 3.9 Bcf per day in 2017. US natural gas inventories are 37% higher than their five-year average. The wide supply and demand gap and high natural gas inventories could put pressure on natural gas prices.

US natural gas price forecast

Moody’s forecasts that US natural gas prices will average $2.25 per MMBtu ( British thermal units in millions) in 2016 and $2.50 per MMBtu in 2017. The World Bank estimates that natural gas prices will average $2.50 per MMBtu in 2016 due to high natural gas inventories. The EIA forecasts that US natural gas prices will average $2.32 per MMBtu in 2016 and $3.11 per MMBtu in 2017. Citibank forecasts that US natural gas prices will average $3.65 per MMBtu in 2017.

High natural gas prices benefit upstream players such as Kosmos Energy (KOS), EXCO Resources (XCO), Gulfport Energy (GPOR), and Memorial Resource Development (MRD). Oil and gas prices also influence ETFs such as the Direxion Daily Natural Gas Related Bull 3x Shares ETF (GASL) and the PowerShares DWA Energy Momentum Portfolio (PXI).

For related analysis, visit Market Realist’s Energy and Power page.

Browse this series on Market Realist:

• Part 1 - Natural Gas Prices Hit a 1-Month Low

• Part 2 - Did the US Natural Gas Inventory Rise Last Week?

• Part 3 - Will the US Natural Gas Rig Count Test Fresh Lows?