U.S. Enters Winter Heating Season With Highest Level of Natural Gas Storage Since 2020: EIA

Natural gas storage stocks in the Lower 48 United States will commence the winter heating season with the highest level of gas in storage since 2020, according to a Dec.7 report published by the U.S. Energy Information Administration. The U.S. has five percent higher stocks entering the winter period compared to the previous five-year average (2018-2022) and stocks for the current winter are seven percent higher than last year.

High storage levels for the current winter period can be attributed to mild weather last winter. As a result, less storage withdrawals were required to fulfil domestic demand. Natural gas storage as of April 1, 2023 was recorded at 1,823 billion cubic feet (bcf), 19 percent higher than the previous five year average. As it stands, the U.S. finished the current gas injection season at 3,776 bcf, more than double the gas storage volume compared to the beginning of the injection period.

When storage sites end the winter season with relatively high gas inventories, storage players require less gas injections during the summer to fill up storage sites and as a result there is a reduction in gas injections. Moreover, high storage levels ease market concerns about potential supply shortages and act as a bearish price driver for domestic natural gas prices.

Natural gas stocks in the U.S. rose in the spring and early summer and flattened out thereafter. Natural gas injections from April to June exceeded the five-year average as storage surplus rose from 298 bcf on March 31 and peaked at 370 bcf during the last week of June. Thereafter, net gas storage injections were below the five-year average.

The U.S. storage situation has mirrored that of the storage condition in Europe.  European storage sites also ended the previous winter at record high storage sites due to mild weather. Moreover, at the start of the European winter season storage levels were significantly higher than the previous five-year average. High storage levels in both the U.S. and Europe have helped eased global gas prices over the last year.