Energy, Commodities US natural gas: Retaining a cautious outlook

The US Energy Information Administration (EIA) expects US natural gas consumption for electric generation to rise 4.7% y/y in August and reach a record high of 46.45 billion cubic feet per day. Despite strong growth in renewables, the EIA expects natural gas to be the main fuel for electric generation in July and August this year, with a share of about 46%.

Yet US natural gas inventories remain well above the five-year average by around 360 billion cubic feet. The "excess storage" has not shrunk over the last few months despite the increase in demand. In our view, this is due to solid US natural gas production and lower liquefied natural gas (LNG) exports, which is likely a result of maintenance at some facilities.

We retain a cautious outlook for US natural gas. Concerns about storage in the US approaching capacity by October may re-emerge. Also, with European natural gas inventories already more than 80% full, they may hit storage limits by late August/early September. And this could weigh on European imports of LNG and therefore US LNG exports, which could push up US inventories faster than seasonal patterns.

Main contributor: Giovanni Staunovo

Original report: US natural gas: Strong power burns , 17 July, 2023.