The new year started with a bang as an arctic blast pushed temperatures down across the U.S. last week.  As millions tried to keep warm, natural gas demand saw a significant increase.  The U.S. was not the only region to experience cooler-than-normal weather, as Europe also saw cold temperatures.

Domestic Demand

Total natural gas demand across the U.S. has increased due to cold weather, rising by 32.0 percent (28.1 Bcf/d) compared to the week ending January 1st. Most of this increase was driven by a 60 percent jump in consumption in the residential and commercial sectors. Additionally, demand for natural gas in power generation rose by 20.2 percent (6.1 Bcf/d) as more electricity was needed for heating, while the industrial sector saw an 8.9 percent increase (2.2 Bcf/d).

A large polar vortex is expected to hit the U.S. the week of January 20th, followed by another potential storm on the 26th.  These events are expected to significantly impact natural gas demand, which could cause volatility in the natural gas market.

International Demand  

Since the start of the Ukraine-Russia war, many countries have been reducing their reliance on Russian natural gas. Along with countries pulling back, the U.S. is preparing to impose harsher sanctions on Russia's oil industry, leading to a 3 percent increase in global oil prices on Friday, January 10th. The U.S. sanctions have already begun disrupting Russian oil supplies to India, pushing them to look at the Middle East and the U.S. for their supplies.  

The U.S. ended 2024 as the world's top LNG exporter, and that does not look to change in 2025. Two major projects are expected to contribute to this growth this year: Venture Global’s LNG facility in Louisiana and Cheniere Energy’s Corpus Christi expansion, both of which began ramping up operations late last year. Venture Global has already brought a 5 million tons per year (Mt/y) production train online, and Cheniere is set to follow soon with a 1.4 Mt/y train. These developments are expected to further grow the export capacity of U.S. LNG.

Production & Supply  

U.S. natural gas storage levels are still above the 5-year average, at 6.5 percent, but this represents a slight decrease from last year and the week ending December 27th. While one shows a .1 percent decrease, the latter shows a 1.17 percent decrease, which shows the increased use of natural gas due to winter weather.

Since COVID, producers have been reducing the number of natural gas rigs to help bring prices back in line. However, this trend is slowing down. This week, the number of natural gas rigs increased by 1 percent compared to the week of December 24th, but compared to last year, the number of rigs has been cut by 12.7 percent.

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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