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The South Central natural gas storage in the United States saw record-low cumulative gas withdrawals from underground storage this winter season, the U.S. Energy Information Administration (EIA) said in its natural gas weekly update this week.
Natural gas withdrawals from the South Central region—which includes Texas, Oklahoma, Louisiana, Alabama, Arkansas, Kansas, and Mississippi – stood at 233 billion cubic feet (Bcf) between early November 2022 and the week ending March 2023, the EIA said. That’s a record low for a winter heating season.
Warmer weather in the South Central region and higher natural gas production in the Haynesville, Permian, Eagle Ford, and Barnett basins in Texas and Louisiana led to lower gas demand for heating and lower need for withdrawals, the EIA said. Moreover, the Freeport LNG in Texas was shut down during most of the winter, which made more than 2 billion cubic feet per day (Bcf/d) of supply available for U.S. domestic consumption.
Heating degree days (HDD) have been 13% below the 10-year average in the South Central storage region this winter heating season, reducing the need to withdraw natural gas. As a result, natural gas consumption in the residential and commercial sectors in the South Central storage region was 13% below the five-year average this winter heating season, EIA noted, citing data from S&P Global Commodity Insights.
U.S. natural gas prices have dipped in recent months due to warmer-than-usual winter weather which required lower volumes of withdrawals from storage. As a result, working natural gas stocks in storage were 21% higher than the five-year average and 31% more than last year at this time for the week ending March 24, per the EIA’s weekly natural gas storage report.
The U.S. Henry Hub front-month futures settled on Wednesday below the $2 per million British thermal units (MMBtu) mark— at $1.991 per MMBtu. This was the lowest closing price since the lockdowns in 2020 and a 64% plunge from a year ago.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com