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Are North American companies producing more natural gas than consumers need? Changes in natural gas storage can give us a good clue to the answer. If storage levels go up by more than it typically does, it likely means that the companies overproduced and vice versa.
The following graph shows the extent of overproduction as implied by the change in U.S. storage levels. Note that demand for natural gas is higher during cold winters and hot summers. Because weather patterns change quickly and unexpectedly, implied overproduction estimates similarly fluctuate.
The graph below shows the monthly changes in inventory levels compared to the seasonal norms.
Storage levels typically climb in spring and fall months, and drop during winter and summer months.