-- US natural gas inventories are entering the April-October injection season on a relatively firm footing, a trend that could help keep prices contained if mild weather and steady production persist in the months ahead, the US Energy Information Administration said on Tuesday.
Working gas in storage across the Lower 48 states is estimated at 1,890 billion cubic feet at the start of the refill season, according to interpolated weekly data. That level stands about 3% above both last year's close and the five-year average, suggesting a modest supply cushion as injections ramp up.
The current surplus follows a volatile winter that briefly tightened balances. A colder-than-normal January, punctuated by Winter Storm Fern, drove a record weekly withdrawal of 360 Bcf for the week ending Jan. 30. Storage levels subsequently dropped to 5.6% below the five-year average. But the deficit proved short-lived. Milder conditions in February and March slowed withdrawals, pushing inventories back above average by mid-March and to nearly 5% above normal by early April.
Seasonal demand dynamics played a key role. US gas consumption typically peaks in winter as residential and commercial heating demand rises. That demand eased sharply after January, with consumption averaging 42.2 Bcf/d in February and 26.0 Bcf/d in March, down from 51.9 Bcf/d in January.
The pullback in demand has already translated into softer prices. Benchmark Henry Hub spot prices averaged $3.04 per million British thermal units in March, a steep decline from $7.72 in January and below February's $3.62 level.
Looking ahead, the combination of above-average inventories and subdued late-winter demand could limit upward pressure on prices during the early injection season, though weather and production trends will remain key variables, EIA said.