Natural Gas Storage Declines Sharply Amid Winter Demand Surge and High Export Activity

The EIA’s January 16 Natural Gas Storage Report showed that as of January 10, 2025, the total working gas in storage was 3,115 billion cubic feet (Bcf), marking a net decrease of 258 Bcf from the previous week. This draw is notable when compared to the same period last year, which saw a smaller draw of 150 Bcf, and the five-year average draw of 128 Bcf.

In the East Region, storage decreased by 68 Bcf to 669 Bcf, a decline of 8.0% compared to last year and 5.5% below the five-year average. The Midwest Region saw a reduction of 73 Bcf, bringing the total to 808 Bcf, representing a 9.0% decrease from last year and a 4.0% drop from the five-year average. In the Mountain Region, a smaller decrease of 15 Bcf brought the storage level to 240 Bcf. However, this region still shows a 13.7% increase over the previous year and a significant 39.5% rise above the five-year average. The Pacific Region experienced a storage decrease of 10 Bcf to 283 Bcf, an 8.0% increase from the previous year and 24.7% above the five-year average. The South Central Region had the largest draw with a 93 Bcf decrease, resulting in 1,114 Bcf in storage. This is a 2.0% decline from last year but 2.3% above the five-year average.

The substantial draw from storage aligns with seasonal trends and colder weather, driving higher demand for heating. Despite the draw, total storage levels remain within the five-year historical range, albeit slightly above the five-year average of 3,038 Bcf.

In response to the storage data, US natural gas futures experienced a slight dip to $4.055/MMBtu. The market anticipated the draw, but the forecast of colder-than-expected weather over the Martin Luther King Jr. Day weekend has kept prices near a two-year high. The freezing temperatures are expected to continue to affect production by impacting gas wells and pipelines, further tightening supply.

Gas flows to major US LNG export plants have reached an all-time high, further driving up overall demand. This increased export activity underscores the growing global demand for US natural gas, particularly during the peak winter months.

Analysts predict that the following two reports will reflect continued substantial draws exceeding 200 Bcf, driven by sustained high heating demand. The combination of elevated domestic consumption and robust export activity is likely to maintain upward pressure on prices.

This report underscores the critical balance of supply and demand in the natural gas market, influenced by both domestic weather patterns and global energy dynamics.