The United States has the largest gas storage asset in the world with more than 400 natural gas storage fields, according to the American Gas Association (AGA) in its most recent “Survey of Underground Storage of Natural Gas in the United States and Canada.”

“Up to 20% of all requirements for the natural gas winter heating season are met by underground storage,” said AGA CEO Dave McCurdy. “The massive storage capacity that our nation possesses is one of the critical tools that enable our members to reliably offer clean natural gas to their consumers at stable prices throughout the year.” Gas storage capability, both in the production and market areas to deliver during peak periods, is one of the main advantages natural gas has over electric power.

Utilities inject natural gas into storage between late March and early November to meet demand during the heating season.

The latest AGA storage report was published at a time when the industry was bemoaning too much of a good thing. Underground storage reached record levels of 3.9 Tcf of working gas in November for the third year in a row, the AGA found. Warmer-than-normal temperatures have persisted in many regions of the country since winter, putting downward pressure on gas demand and prices.

That mild weather, teamed with surging shale gas production, has left record-high natural gas inventories in storage. As of Jan. 27, storage inventories stand at 2,966 Bcf and are 586 Bcf higher than last year at this time and 601 Bcf above the five-year average of 2,365 Bcf, according to the Energy Information Administration (EIA).

This surplus of gas did not go unnoticed during the month of January, as a number of bearish milestones in the natural gas futures arena were set during the month. Not only did the February contract take out long-standing support at $2.409 from Sept. 4, 2009, but the contract’s Jan. 23 low of $2.231 nearly set a 10-year low. The last time a front-month contract traded lower was nearly 10 years ago on Feb. 15, 2002 when the March 2002 contract reached a low of $2.147.

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