Behind the Natural Gas Rally: Why the Recent Rise from the Depths?

(Continued from Prior Part)

Natural gas supply and demand gap

In its March STEO (Short-Term Energy Outlook) report, the EIA (US Energy Information Administration) stated that the US natural gas supply-demand gap could average 2.89 Bcf per day in 2016 and rise to 4.05 Bcf per day in 2017. High natural gas inventories will also likely add pressure to the already oversupplied natural gas market in 2016 and 2017.

Natural gas price forecasts

The EIA also forecasts that US natural gas prices could average $2.25 per MMBtu in 2016 and $3.02 per MMBtu in 2017. The financial services firm Raymond James has stated that natural gas prices could average around $2 per MMBtu in 2016, while the credit rating agency Moody’s has stated that US natural gas prices could average $2.25 per MMBtu in 2016 and $2.5 per MMBtu in 2017.

Such rollercoaster rides in natural gas prices affect oil and gas exploration and production companies like Gulfport Energy (GPOR), Anadarko Petroleum (APC), Comstock Resources, and Memorial Resource Development (MRD). They also influence ETFs and ETNs such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the VelocityShares 3x Long Natural Gas ETN (UGAZ), and the PowerShares DB Energy ETF (DBE).

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

Browse this series on Market Realist:

• Part 1 - Short Covering Drives Natural Gas Prices to One-Month High

• Part 2 - US Natural Gas Inventories Fell for 16 Consecutive Weeks

• Part 3 - US Natural Gas Rig Count Tests a 29-Year Low