US Natural Gas Inventories To Reach Record Highs By October - Energy Agency

US Natural Gas Inventories to Reach Record Highs by October - Energy Agency

Natural gas in storage is expected to hit record highs in the United States by the end of October from the combination of mild winter weather and unbridled output, the US Energy Information Administration (EIA) said in an outlook published Monday

WASHINGTON (Pakistan Point News / Sputnik - 24th February, 2020) Natural gas in storage is expected to hit record highs in the United States by the end of October from the combination of mild winter weather and unbridled output, the US Energy Information Administration (EIA) said in an outlook published Monday.

"EIA forecasts that the Lower 48 states' working natural gas in storage will end the 2019-20 winter heating season (November 1-March 31) at 1.935 billion cubic feet (bcf), with 12 percent more inventory than the previous five-year average," the agency said in its February Short-Term Energy Outlook.

The EIA attributed the rise to mild winter temperatures that led to smaller withdrawals from gas from storage, adding that this was compounded by continued strong production in the fuel.

US natural gas inventories were already high when the winter heating cycle began, the EIA said.

As of October 11, 2019, total gas in storage surpassed the previous five-year average - an indicator of typical storage levels - for the first time since mid-2017, the EIA said.

Inventories began the heating season on October 31, 2019 at 3.725 bcf, the agency added.

"EIA expects withdrawals from working natural gas storage to total 1.790 bcf at the end of March 2020," the EIA said. "If realized, this would be the least natural gas withdrawn during a heating season since the winter of 2015-16, when temperatures were also mild."

US natural gas futures hit three-week lows in New York trading on Monday, hovering at under $1.85 per million metric British thermal units as weather forecasts indicated warmer-than-usual temperatures for this time of year.

It is not known how demand for gas will fare during the summer, when the fuel is used to generate power required for cooling.

The EIA said while it expected current low prices of gas to de-incentivize production this year, resulting in lower output, inventories were still seen exceeding the previous five-year average for the remainder of 2020.