US manufacturing renaissance boosts industrial gas demand, prices

Raymond James & Associates

Raymond James analyst Marshall Adkins predicts a revival of the US industrial sector will significantly drive gas demand and gas prices higher.

Below is the summary of the report.

While both political parties will inevitably take the credit for the renaissance of the industrial/manufacturing sector of the US economy, no matter what, this is a positive trend for the domestic economy. Based on our sector-by-sector analysis, future US natural gas demand growth will receive a boost from the industrial sector and will lead to a gradual improvement in gas prices over the next five years. Based on the large number of proposed projects in gas-to-liquids, methanol, ethylene crackers, and fertilizer, there could be a sharp gas demand surge that drives gas prices even higher and brings rigs back to the dry-gas plays. In sum, we believe that this trend will facilitate higher prices along the back end of the gas futures curve and supports an upward bias to our current long-term Henry Hub gas price forecast of $4.25/Mcf.

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