THE NATION IS STILL IN THE GRIPS OF A HEAT WAVE
2022 has seemed like one heat wave after another, but so far, it only ranks as the sixth hottest year on record, with 2021 being the hottest year. If the heat waves continue, we could see 2022 become the hottest summer on record. FYI, the ten hottest years have all been in the last ten years.
The high pressure in the Plains states like Nebraska, Minnesota, Iowa, South Dakota, and Kansas has not moved much for the last two months, and August looks like it will stay right where it is. This high pressure will bring 90-degree weather from Kansas north and triple digits into Texas. These high temperatures will keep demand high.
NOAA PREDICTION FOR AUGUST
NATURAL GAS: DEMAND KEEPS PRICING ABOVE THE PROJECTED AVERAGE
HIGH DEMAND AND INCONSISTENT PRODUCTION KEEP PRICING HIGH
- Despite the EIA projecting an average price of $5.97 on the NYMEX for the 2nd half of 2022, high demand has kept pricing closer to $8.00.
- Pricing did drop for the week by over a dollar. This drop may result from short investors dumping their position in July and buying short again for August.
- A significant issue has been a gas/oil field services and supplies shortage. Pipeline and machinery are in short supply to even start drilling. Halliburton, the largest supplier of drilling equipment and pipeline, has said they are close to zero inventory and don’t see that improving until 2023.
NATURAL GAS STORAGE REPORT
A new wrinkle in the quest to increase gas production has been the oil and gas drilling machinery and parts shortage. The pipeline has been in short supply due to supply chain issues, and Halliburton, the largest provider of drilling services and equipment, predicts it will remain in short supply for the next few months.
No major event in sight will bring natural gas pricing down to where it was last year or even what we saw for a short period in June.
That does not mean something won’t happen.
A shutdown of another LNG facility or a hurricane could all affect demand and lower pricing. But, on the other hand, a sustained heat wave and a shutdown in production anywhere along the line could also bring it back up.
Electricity Grid: Forward Power Pricing
PJM BGE JULY 19TH
PJM BGE JULY 26TH
PJM ADHUB JULY 19TH
PJM ADHUB JULY 26TH
