The upcoming winter should be a relatively stable one for United States energy markets, with forecasters expecting a warmer-than-average season and natural gas storage levels at or above average levels, according to the 2019-2020 Winter Energy Market Assessment released Thursday by FERC's Office of Enforcement (OE).

The National Oceanic and Atmospheric Administration's (NOAA) Climate Prediction Center said Thursday it expects warmer-than-average temperatures to dominate most of the United States this winter. The Northern Plains, Upper Mississippi Valley and the western Great Lakes areas will have equal chances of below-, near- or above-average temperatures, and no part of the country is favored to have below-average temperatures this winter, NOAA said.

"A warmer than average winter would moderate fuel and electricity demand," OE said. "However, as seen in previous winters, acute cold weather events can occur during warmer than average seasons. These events increase the short-term demand for natural gas and electricity, which could create significant operational and market challenges."

Going into the winter, natural gas storage levels are near the five-year average, futures prices are lower than last winter, and pipeline additions in the Permian and Appalachian basins have bolstered the fuel supply chain, allowing additional supplies to reach markets, according to the report.

Still, "certain regions are more dependent on natural gas than others, and pipeline outages have the potential to increase both electric and natural gas price volatility. Coal and oil-fired generation continue to play an important role in maintaining electric reliability during the winter, especially in the Northeast, where winter demand for natural gas can exceed pipelines' capacity."

The Energy Information Administration (EIA) on Thursday reported a 104 Bcf injection into natural gas storage inventories for the week ending Oct. 11, bringing total Lower 48 storage levels to 3.52 Tcf, slightly above the five-year average of 3.51 Tcf. EIA has forecast injections into storage will exceed the five-year average for the rest of the injection season, resulting in inventories exceeding 3.70 Tcf by the end of October, a 16% increase over October 2018 levels and slightly above the five-year average. Total withdrawals from storage during the upcoming winter months are expected to be about 2.10 Tcf, compared with 2.00 Tcf last winter, according to EIA.

Basis futures prices are up in New England, compared with last year's futures settlement prices, but were down everywhere else. Basis futures prices are up $1.16/MMBtu in Boston, and down  $1.56/MMBtu in New York compared with the same time last year, OE said.

"The strongest contributors to lower winter futures prices across the country include the continued growth of natural gas production, the return of natural gas storage inventories to long-term average levels, as well as forecasts for a warmer-than-average winter," said OE's Micah Gowen. "...The increased New England prices compared to last winter may reflect local weather expectations, as well as the potential for reduced delivery during integrity testing on the Algonquin and Texas Eastern transmission lines."

Dry natural gas production is expected to remain strong, reaching an average 91.6 Bcf/d for 2019, a 10% increase from the 2018 average, according to a recent report from the Energy Information Administration (EIA).

"While production continues to grow, the EIA forecasts U.S. demand will average 100 Bcf/d from November to March, a 1% increase from the previous winter," OE said. "EIA forecasts domestic demand in January 2020 will average 112 Bcf/d. This is nearly 3 Bcf/d higher than the record for average monthly demand, which was observed in January 2019."

In addition, consumption of feedgas has grown to 6 Bcf/d from 4.5 Bcf/d since the beginning of the year, OE said.

"Increased demand for feedgas from all operational facilities should continue through this winter as utilization rates are expected to remain high."