US Gas Surplus Will be Eliminated before End of Winter: Reuters

US gas inventories are near record highs for the time of year after exceptionally mild temperatures, but the maximizing gas combustion by power generators and a cut back in drilling should eliminate the surplus by the end of winter, Reuters’ John Kemp said.

• Surplus inventories have been flat over the last seven weeks since mid-March, after rising almost constantly since October.
• This winter is likely to be significantly colder than the previous, with greater heating demand and gas consumption.
• Low gas prices are already encouraging maximum use of gas fired electricity instead of coal. This allowed electricity generators to burn through record gas volumes.
• Meanwhile, any extended periods of very hot weather in the summer could boost air-conditioning demand and draw down gas inventories rapidly, helping to narrow the surplus.
• Ultra-low gas prices have also forced some producers to cut their drilling programmes, with fewer rigs and completed wells filtering through to supply.