Despite colder conditions earlier in February contributing to a significant inventory draw, the latest trends suggest a return to weaker consumption. Lower-48 state gas demand fell to 80.2 Bcf/day last Friday, a 10.3% year-over-year decline. Unless a late-season cold spell emerges, traders may struggle to find strong bullish catalysts in the near term.
How is Supply and LNG Demand Affecting the Market?
Production remains robust, with Lower-48 dry gas output at 107.8 Bcf/day, up 2.8% from last year. At the same time, LNG exports continue to provide some support, with flows to U.S. export terminals at 15.6 Bcf/day, a 2.1% week-over-week increase.
A long-term bullish factor emerged with the Trump administration lifting the Biden-era pause on approving new LNG export projects. Bloomberg reported that a decision on the Commonwealth LNG facility in Louisiana is nearing, which could eventually boost U.S. natural gas demand. However, in the short term, storage and weather are dominating price action.
Did Storage Data Offer Any Relief?
Last week’s EIA report showed a 261 Bcf storage draw for the week ending February 21, smaller than the expected 271 Bcf but still well above the five-year average of 141 Bcf. Total working gas in storage now stands 11.5% below the five-year average, signaling tighter supplies.
While storage levels remain supportive, the lack of immediate demand has kept the market from rallying. Even with inventories below historical norms, traders are hesitant to push prices higher without a weather-driven demand boost.
