Record U.S. LNG Exports
Despite close to nil month-over-month growth, U.S. natural gas marketed production set a record (0% MoM/ 6% YoY/ 13% YoY4). Shale natural gas output followed a similar pattern (0% MoM/ 6% YoY), with an even more impressive gain when compared to the pre-pandemic period (23% YoY4). Liquefied natural gas (LNG) exports also registered a record (2% MoM/ 9% YoY/ 236% YoY4). In parallel, the share of LNG exports in total U.S. production reached an all-time high. Over the last four years, the average weight has doubled and currently stands at one-tenth.
Factors that contributed to the surge are modest domestic demand coupled with an increase in U.S. liquefaction capacity. Predominantly influenced by seasonal patterns, the mildness of last winter weighed down national consumption. Domestic demand continues to fall behind production (-18% MoM/ 1% YoY/ 12% YoY4). Some excess production moves to inventories, while the rest gets liquefied for exports. Natural gas inventories remained relatively elevated compared to other periods (-3% MoM/ 33% YoY/ 57% YoY4).
Furthermore, the resumption of operations at Freeport, the largest U.S. LNG terminal, boosted liquefaction capacity. At its peak, it accounts for one-fifth of overall U.S. LNG exports. More additions to the national liquefaction capacity are anticipated for the upcoming year, significantly expanding LNG export levels. Although natural gas prices dropped from previous heights (-6% MoM/ -67% YoY/ -18% YoY4), producers believe this is not a long-term phenomenon and project an upward trend for demand.
1YoY4 = comparison with pre-pandemic 2019