June marks the start of hurricane season in the U.S. The National Oceanic and Atmospheric Administration (NOAA) predicts a 60 percent chance of an above-normal season, which means we can expect 13 to 19 named storms. These storms can have a major impact on natural gas production in the Gulf region.

Domestic Demand

Natural gas demand in the U.S. has increased slightly this week compared to the same period last year. Overall, there was a 2.9 percent increase in total demand, most of the total increase came from a 10.2 percent increase in the residential/commercial sector, in the industrial sector there was a 1.4 percent increase, and a slight decrease of .3 percent in power generation. As we continue into the summer months, we can expect the demand for power generation to increase as temperatures rise.

International Demand  

In April, the U.S. set a record for liquefied natural gas (LNG) exports, reaching 9.3 million metric tons. However, May's exports fell to 8.9 million metric tons due to short-term outages and maintenance outages that affected all U.S. LNG. While this remains a substantial number of exports, the country's largest LNG facility operated at its lowest capacity in 22 months. Despite this decline from a record-setting month, the U.S. continues to lead the world in LNG exports.

In the past, Asia has been the leading importer across the world of LNG. However, demand in China has declined due to their increased domestic production and a milder winter this past winter, resulting in a 23 percent decrease in LNG imports compared to last year. While this reduction signifies less need for U.S. LNG in Asia, Europe continues to show strong demand. This year, Europe has become the primary importer of U.S. LNG, as its storage levels have been significantly depleted due to high demand during the winter months. Currently, storage inventories in Europe are at 49 percent capacity, down from 70 percent at this time last year.

Production & Supply

As of the week ending May 30th, total natural gas storage is at 2,598 billion cubic feet (Bcf). This represents a 10 percent decrease compared to the same period last year, but it is 4.7 percent higher than the five-year average of 2,481 Bcf. Last month marked the first instance this year where storage levels exceeded the five-year average.

The natural gas rig count has remained relatively stable compared to last year, showing only a 1 percent decrease. However, production remains solid with a 4.2 percent increase in marketed production and a 4.5 percent increase in dry production compared to last year.

Looking ahead, summer production levels may be affected by a potentially active hurricane season and ongoing wildfires in Canada. Canadian Natural Resources Ltd., the country’s largest oil and gas producer, was recently forced to evacuate operations due to a nearby blaze. Last week, U.S. natural gas imports from Canada averaged 6.5 billion cubic feet (Bcf) per day.

If you have any questions about the information in this newsletter or would like to talk to someone about your natural gas, please call your sales representative.

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