Winter temperatures are as always a wildcard for the US natural gas market, particularly with milder weather in recent years. (UBS)

This tightening has been driven by an increase in power demand caused by warm weather, which is offsetting weak demand from the industrial and the residential and commercial sectors. Higher gas exports have also helped. That said, US natural gas inventories are likely to end the injection season (end-October) at around 3.8–3.9 trillion cubic feet, close to the record high set in 2020.


Winter temperatures are as always a wildcard for the US natural gas market, particularly with milder weather in recent years. We will closely track the implications of El Niño for the US natural gas market, which could result in drier and/or warmer weather in the US. That said, these are historical patterns, and the reality on the ground could turn out differently. We expect US natural gas inventories to end the withdrawal season (end-March) at around 1.8 trillion cubic feet, close to the five-year high.


Hence, we reiterate our cautious outlook for US natural gas prices. US supply growth is likely to slow down next year, but power demand is unlikely to be higher than expected again and may not help rebalance the US natural gas market amid further renewable capacity growth in the US.


Main contributor - Giovanni Staunovo


Original report - US natural gas Hot weather helped, but winter a wildcard, 28 September 2023.