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Colder-than-usual weather in January and high LNG exports reduced U.S. working natural gas storage levels to below the five-year average again, after one of the warmest Decembers on record had boosted inventories to above the five-year average last month, the Energy Information Administration said on Monday.
The winter heating season began on November 1, with natural gas in storage at 3 percent below the previous five-year average. Then, due to a mild December, Lower 48 working natural gas in storage surpassed its five-year average in the middle of last month.
However, colder-than-usual temperatures in early January pushed demand higher, and high liquefied natural gas (LNG) exports also contributed to a tighter market in recent weeks.
As of January 21, natural gas in storage was 25 Bcf, or 1 percent, less than its previous five-year (2017–2021) average for the week, the EIA said in its latest Weekly Natural Gas Storage Report last week.
Record-high LNG exports limited gains in U.S. natural gas inventories, despite a much warmer-than-normal December and high natural gas production in the Lower 48 states.
The EIA estimated in its January Short-Term Energy Outlook that U.S. LNG exports averaged 11 Bcf/d from November through January in response to high prices in both Asia and Europe.
“In particular, inventories in Europe remain much lower than their five-year averages and contributed to increased demand for LNG,” said the EIA.
In December, a fleet of LNG cargoes from the United States was flocking to Europe, where the gas and energy crisis had pushed regional LNG prices way above the Asian LNG benchmark and 14 times higher than the U.S. Henry Hub price.
The benchmark U.S. gas price jumped last week as frigid weather in many parts of the United States lifted demand. Later this week, demand across the U.S. is also expected to be high or very high as most of the U.S. will see cold or very cold temperatures, according to NatGasWeather.com.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com