According to the U.S. Energy Information Administration, last year American consumption of natural gas reached 75.1 billion cubic feet per day (Bcf/d). This rate is expected to increase by 0.4% by the end of 2017, and 2% by the end of 2018.
The main drivers of this increased demand were, of course, the power generation companies and industrial sectors, due to residential and commercial heating expenses rising because of colder winter temperatures.
These sectors will also account for the biggest projected increases in consumption in 2017, with an expected rise of 6% in residential usage, and 5.2% in commercial consumption. The outlook for 2018, closely mirrors the forecast for this year.
In the industrial sector, including fertilisers and chemicals production, consumption is expected to increase by 0.6% in 2017, and by 1.9% in 2018. Electric power consumption by factories should go down by 4.4% this year, but experts anticipate an increase of 2.7% next year.
In 2016, U.S. production of natural gas reached 72.4 Bcf/d, with Mexico serving as the prime export destination. Even though Mexico is among the world’s largest producers of natural gas, domestic production hasn’t been able to calm the booming demand in the past few years.
In fact, the 21.7% rise in natural gas exports from the U.S. in 2016, was mainly due to higher exports to Mexico. Late last year the EIA said that these exports would almost double by 2018.
However, the above projection might need to be significantly lowered. Pipeline companies such as Kinder Morgan and ONEOK Partners could have cause to worry that if President Trump slaps punitive tariffs on Mexican imports, then the USA’s southern neighbour might retaliate with import taxes on American exports, potentially damaging the U.S. natural gas industry.
Trends in Energy: Drilling efficiency and increasing U.S. oil and natural gas production
Future relations between Mexico and the U.S. are certainly in a state of flux, and what happens over the next few months could well influence longer-term projects in the natural gas industry. Some interesting trading opportunities could arise, so be sure to keep an eye on the advanced charts on your trading platforms, including those you can find at UFX.
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