Extreme cold in February led to lower-than-average natural gas storage levels through the summer, prompting concerns about winter weather this year and volatile natural gas prices. In its November Short-Term Energy Outlook, the U.S. Energy Information Administration estimates that U.S. natural gas storage levels had built to within three percent of the previous five-year average at the end of October. EIA Acting Administrator Steve Nalley says, “Winter temperatures will be the key driver of natural gas demand, inventories, and ultimately prices.” Despite relatively high natural gas prices, the U.S. electric power sector continues to use significant amounts of natural gas for generation. In addition, EIA estimates that U.S. natural gas exports of liquefied natural gas averaged 9.8 billion cubic feet per day in October, which is 37 percent above the October 2020 level, and essentially at capacity. U.S. natural gas exports will most likely remain close to capacity this year and in 2022 to meet demand.
Expect Volatile Natural Gas Prices This Winter