A sharp drop in US liquefied gas imports in 2008 has stirred worries about tight supplies and helped spike natural gas prices 70 per cent this year, but some industry experts question whether current fundamentals justify prices at 2-1/2-year highs.

“There are plenty of reasons for the market to be nervous right now, crude is on a roll and we could have an active hurricane season or a hot summer, but if that doesn’t happen, US supply should be sufficient to get inventories back to comfortable levels,” said Stephen Smith of Stephen Smith Energy Associates, a consulting firm in Mississippi.
While LNG is still only a small part of overall supply, providing just over 2 per cent of total US demand, record imports last year of 770 billion cubic feet, or about 2.1 bcf per day, helped build inventories for last heating season to all-time highs above 3.5 trillion cubic feet.
Utilities typically stockpile gas in inventory from April through October to help meet peak winter heating demand.
So far this year, LNG deliveries have slowed to less than 1 bcf daily, and with domestic inventories of 1.886 trillion cubic feet lagging last year by about 340 bcf, some analysts have voiced concerns about rebuilding storage for next winter.
But others said strong gains in domestic gas production should lessen the need for LNG this year. LNG is super-cold natural gas shipped in liquid form on special tankers, then regasified and fed into pipelines.
Experts agree that delays in new liquefaction capacity, a huge nuclear plant shutdown in Japan and a drought in Spain were likely to keep global LNG supplies tight in 2008.