Natural Gas Data Sparks Optimism For Chevron, BP, Shell And Natural Gas ETFs

The market for natural gas was choppy between 2022 and 2023.

The market experienced significant turbulence caused by Russia’s invasion of Ukraine, plus potential shortages across the European Union.

While geopolitics did have an impact, the demand side of the equation also appeared weak. For the most of 2023 (chart above), demand for natural gas remained below 100 billion cubic feet per day (Bcf/d). Meanwhile, supply has exceeded demand, leading to muted prices (chart below).

The trajectory appears to be reversing in 2024, for demand and well as prices. The chart above shows a rebound in natural gas spot prices kicking in, in January 2024. An uptick in natural gas prices should be good news for various producers. Among the biggest players are Chevron Corp CVX, BP PLC BP, Shell PLC SHEL, EQT Corp EQT and APA Corp APA.

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Total demand is picking up, too. See the table below. From averaging at 116.9 Bcf/d, it was recorded at 131.2 Bcf/d for the week ended Jan. 10, 2024.

The EIA forecasts, “supply of natural gas, including both production and imports, to increase by more than 1 billion cubic feet per day (Bcf/d) in 2024, while demand for natural gas, including domestic consumption and exports, rises by almost 2 Bcf/d. Demand growth in our forecast is mostly the result of growth in exports.”

Per the EIA, the modest natural gas supply growth in 2024 is driven by a 1.5 Bcf/d increase in production, slightly offset by a 0.4 Bcf/d decrease in imports. Consumption in residential, commercial, and electric power sectors is forecasted to rise, driven by colder weather. However, decreases in the industrial sector counterbalance this trend.

Furthermore, natural gas exports, both through pipelines and as LNG, are expected to increase in 2024. Overall, while demand is projected to outpace supply, the surplus storage is expected to limit notable price increases.

With natural gas prices expected to be on an uptrend in 2024, especially post-Q1, here are two investing options:

• The United States Natural Gas Fund LP UNG is down 50% over the past year.
• The ProShares Ultra Bloomberg Natural Gas ETF BOIL is down 86% over the same period.

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