Market News :U.S. households forecast to use more heating fuels this winter compared with last winter

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, National Oceanic and Atmospheric Administration.
Note: Horizontal bars indicate monthly average degree days over the period 1971-2000.

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U.S. households are expected to use more heating fuel this winter compared with last winter because temperatures are expected to be near normal this winter compared with last winter's above-normal temperatures in many parts of the country.

Household natural gas heating demand this winter (October through March) is expected to be up nearly 14%, heating oil up 17%, electricity up 8%, and propane up 17%, according to EIA's Short-Term Energy and Winter Fuels Outlook for the 2012-13 U.S. heating season. While demand is expected to be higher than last winter, consumption is forecast to be less than the five-year average for all the major heating fuels except heating oil.

EIA's forecast for higher household heating demand mainly reflects a much colder winter east of the Rocky Mountains compared with last winter, with heating degree days in the Northeast, Midwest, and South expected to be 20% to 27% greater this winter, according to National Oceanic and Atmospheric Administration's (NOAA) forecast.

At the same time, supplies look plentiful for most heating fuels this winter:

Natural gas is the most popular heating fuel, used by almost half of U.S. households. Natural gas inventories are expected to climb to 3.9 trillion cubic feet by November 1, a record for that time of year.

Electricity is the main heating source for almost 38% of households. In addition to record natural gas inventories to draw down to generate electricity, coal stocks held by the U.S. electric power sector are forecast to total 187 million short tons by November 1, up nearly 19% from a year earlier.

Heating oil is burned by 6% of U.S. households for winter fuel, with 8 out of 10 of those heating oil users located in the Northeast. Lower heating oil stocks in the East Coast and Gulf Coast states, along with New York requiring heating oil with lower sulfur levels, are expected to contribute to a tighter heating oil market this winter.

Propane is used to warm about 5% of households, many located in rural areas. Propane inventories totaled almost 76 million barrels in early October, up 32% from the same period a year ago.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook.