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U.S. Natural Gas - Spot Price Low, Inventory High

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Earlier this month, the U.S. Energy Information Administration (EIA) released data showing the continued downward trend of natural gas prices in the United States. In the face of warmer-than-normal winter temperatures and rising domestic natural gas production, natural gas spot prices hit near 10-year lows.

Subsequently, the EIA released its projections related to natural gas supply, stating that increasing supply and relatively low demand has also led to a glut of natural gas in the U.S. marketplace. According to the EIA, US natural gas inventories at the end of the winter heating season are expected to be at their highest level since 1983. In their February Short-Term Energy Outlook, the EIA projects that the amount of gas in underground storage at the end of next month will be up 31% from the previous year.

According to the EIA report, natural gas production within the Marcellus shale region likely had a significant impact on natural gas inventories. EIA recently stated that production in this area “likely contributed to lower storage withdrawals as more gas supply in the Northeast reduced the need to bring up stored gas from the Gulf Coast.”

The views expressed are those of the author and are not necessarily those of Scientific American.

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