EIA expects volatile natural gas prices this winter

After extreme cold in February led to lower-than-average natural gas storage levels in the United States through the summer, concerns about winter weather are contributing to volatile natural gas prices as the winter heating season begins. In its November Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) estimates that U.S. natural gas storage levels had built to within 3% of the previous five-year average at the end of October.

“Mild weather has limited natural gas consumption and helped bring our storage levels closer to average in recent weeks, but cold winter weather could continue to put upward pressure on prices,” said EIA Acting Administrator Steve Nalley. “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 (Bcf/d) in October, which is 37% above the October 2020 level, and are essentially at capacity. U.S. natural gas exports will most likely remain close to capacity for the remainder of this year and in 2022 to meet global demand.

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