Natural gas inventory exceeds five-year average for first time since November 2013

Working natural gas in storage has surpassed five-year average levels for the first time in more than a year. At 2,157 billion cubic feet (Bcf) as of February 13, stocks are 58 Bcf greater than the five-year average. Recent extremely cold weather may result in high stock withdrawals for the week ending February 20, which could again push stocks below their five-year average. However, natural gas production in February and March that is forecast to average 5 Bcf/day above the year-ago level is likely to contribute to healthy inventories and moderate prices as the nation moves from winter into spring.

At no point during 2014 did inventories surpass their five-year average; the most recent excess was on November 22, 2013. Inventories ended the 2013-14 winter withdrawal season last March at a 10-year record low of 837 Bcf. After a record injection season in 2014 (April-October), weekly working gas inventories reached a seasonal peak on November 7, 2014, of 3,611 Bcf, but were still 237 Bcf below the five-year average of 3,848 Bcf for that week.

While there had been several near-record withdrawals early this heating season, withdrawals so far this season have been significantly lower than the record levels of last winter, and 16% lower than the five-year average. Recent production growth and moderate demand have allowed for the increase in storage, and have also led to relatively low prices. The most recent Short-Term Energy Outlook (released February 10) projects inventories will end the injection season at 1,699 Bcf, 43 Bcf more than the five-year average.

Increasing natural gas production has helped to displace some of the need for storage during peak-use periods. Dry natural gas production has averaged 71.7 Bcf/d since November 1, as reported by Bentek Energy, approximately 6.3 Bcf/d more than production for the same period last winter. This higher level of production is forecast to continue through the end of the heating season. EIA's Short-Term Energy Outlook forecasts that February and March production will average 72.7 Bcf/d, 5.0 Bcf/d higher than during the same period in 2014.

At a national level, lower natural gas consumption this winter has also reduced the need to withdraw natural gas from storage. Above-average temperatures experienced in the western half of the United States so far this winter have helped to offset the effects of colder weather in other parts of the country, dampening overall natural gas consumption. According to data from Bentek Energy, since November 1, U.S. natural gas consumption has averaged 88.4 Bcf/d, 3.3 Bcf/d lower than the same period last year. With closer-to-normal temperatures reducing residential and commercial consumption, EIA forecasts that total natural gas consumption in the United States will average 88.1 Bcf/d for the remainder of the heating season (February-March) in 2015, compared with an estimated 90.9 Bcf/d during that period in 2014.

Henry Hub spot and Nymex near-month futures prices for natural gas have remained at relatively low levels for the past few months, falling from prices above $4 per million British thermal units (MMBtu) in November. The Henry Hub spot price and Nymex near-month contract have traded below $3/MMBtu since January 20. While the national benchmark price remains low, regional natural gas spot prices, particularly those in New York and Boston, have spiked this winter, reflecting high demand and transportation constraints in times of extreme cold.

Principal contributors: Katie Teller, Scott Bradley