As winter approaches, the U.S. is bracing for the impacts of La Niña. Typically, this pattern brings colder, snowier weather to the northern states and warmer-than-normal temperatures to the southern states. Still, this year's La Niña could impact the demand for natural gas.  

Domestic Demand

As temperatures drop across the U.S., demand for natural gas has increased with total consumption increasing by 5.9 percent (4.1 Billion cubic feet (Bcf/d)) compared to the week of October 21st and 1.5 percent compared to this time last year.  The increase in demand was largely driven by power generation with a rise of 6.4 percent (2.1 Bcf/d). However, the most significant growth occurred in the residential and commercial sectors, which saw a substantial 13.9 percent (2.1 Bcf/d) increase.

International Demand  

The European Union (EU) is supporting the Vertical Gas Corridor project to improve liquefied natural gas (LNG) access for Central and Eastern European (CEE) countries, especially as Russian gas supplies may end by 2024. U.S. LNG is expected to play a key role in the project building on the U.S.'s crucial support during Europe’s energy crisis in 2022-2023 when Europe imported around 149.72 million metric tons (206 billion cubic meters) of U.S. LNG.

Meanwhile, Cheniere Energy, the leading U.S. LNG exporter, raised its annual profit forecast after strong demand helped it exceed third-quarter expectations. This boost was driven by higher Asian LNG prices, which reached their highest levels in over eight months, along with a rise in international exports.

Cheniere exported 158 LNG cargoes during the quarter, up 4 percent from last year. CEO Jack Fusco also announced that the Corpus Christi Stage 3 project in South Texas will soon start, with the first LNG production expected by the end of the year. They expect all three trains will add 3 million metric tons to the market next year.

Production & Supply  

As of Friday, October 25, 2024, natural gas storage reached 3,863 Bcf, up by 78 Bcf from the previous week and 107 Bcf (2.8 percent) higher than last year. While storage is still 4.8 percent (178 Bcf) above the five-year average and has increased from the previous week, it has gradually declined this year. U.S. storage was 39.4 percent above the five-year average in May, mainly due to weather conditions and producers reducing the number of natural gas rigs.

Natural gas rigs in the U.S. have been declining this year as producers work to align production levels with prices. Although there was a 2 percent increase in rigs from the week of October 22, this still reflects a significant drop of 13.7 percent compared to last year. This reduction indicates producers' efforts to stabilize the market amidst fluctuating demand and prices.

On Monday, November 4th, natural gas markets shifted as traders responded to news of Hurricane Rafael. This has raised concerns about possible supply disruptions, as the Gulf is a major natural gas production area. Recently, the U.S. dealt with two major hurricanes—Milton and Helene. Hurricane Helene disrupted natural gas production and caused power outages, while Hurricane Milton had less impact on LNG facilities but still affected natural gas demand in the Southeast.

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.