A government report Thursday showed a surplus in the U.S. natural gas stockpile, almost a year after the nation's inventory plunged to an 11-year low.
There are 2.16 trillion cubic feet of natural gas in storage, higher than the 5-year average of 2.09 trillion, according to the report by the U.S. Energy Information Administration.
"For the first time since last winter the supply of natural gas actually got above the 5-year average," said Phil Flynn, an energy analyst with Price Futures Group.
"It took them a long time, but they did it," Flynn said about natural gas producers in the U.S.
An abundant supply should keep market prices low, despite the frigid temperatures across the nation, because demand will be limited with spring approaching, analysts said.
In November 2013, natural gas prices averaged $3.50 per million British thermal units and surged to $6.50 as heating demand depleted supplies. By the end of that winter, natural gas stocks were 48 percent below the five-year average.
Natural gas supplies were still 8.2 percent below average in November 2014, despite energy companies' efforts to replenish stockpiles, leading analysts to worry about whether there would be adequate supplies for winter 2014-15.
At the current level, natural gas stockpiles are 678 billion cubic feet more than they were during the same period last year, the agency said in its weekly report.
Inventories actually fell 111 billion cubic feet during the week ending Feb. 13, the report said.
Natural gas for March delivery fell 0.3 cent to settle Thursday at $2.83 per million British thermal units on the New York Mercantile Exchange.
"It looks like we still got a pretty loose supply-demand balance," said Steve Mosley, a commodity trading adviser in Maumelle. "What that's doing is offsetting the weather and keeping prices from going up on this weather."
Analysts said there are several reasons the nation's stockpile expanded. First, stores were helped by a milder summer in 2014 that weakened demand for electricity to run air conditioners. A warm early winter also kept demand low.
Energy companies were also able to increase natural gas production.
"The producers have gotten better at producing per well," said Michael Lynch, president of Strategic Energy and Economic Research Inc.
He said that in more productive shale formations -- mainly the Marcellus and Utica Shales in the Northeast -- the companies were able to "optimize techniques."
Mosley said prices will stay low because natural gas storage is projected to remain above the 5-year average. He said he initially thought prices could drop below $2 per million Btu, as they did in 2012, because of low demand.
He now expects prices to drop below $2.50 per Btu by March, and maybe even below $2.20.
"The fact we had a very cold January and February, especially February, it's going to keep that ending storage level to not be as high as it was," Mosley said.
Business on 02/20/2015