This week’s Market Snapshot looks at the increase in temperatures across the US – and thus, electricity demand, in the next two weeks. Plus, the natural gas market has started to climb up. Don’t wait to act on your next natural gas contract!
WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK
With extreme heat moving eastward, expect higher demand for electricity in more populated areas as pretty much everything from Denver, East will see much warmer temperatures in the next two weeks. The core of the heat wave will be centered over the Midwest, with temperatures in the mid-90s all next week.
WEEKLY GAS STORAGE:
NATURAL GAS DEMAND WITH EXPORTS
- With the onset of summer, power demand is well above the five-year average and last year, especially when you account for exports as well. Demand has been closing in on 100 Bcf a day. If this coming heat wave is impactful, we could see an actual withdrawal of Natural Gas in the next few weeks, which is very rare for mid-summer.
- If you are waiting / gambling on the market to drop to pre-pandemic levels, you are playing a losing hand.
- Production is forecast to retreat in the coming month
- Freeport is back online, and more LNG export facilities are being constructed.
- You cannot rely on another record-breaking mild winter.
- Not a single market fundamental points to lower demand in the future.
FORWARD POWER PRICING
With the extreme heat affecting major population centers, electricity demand will be much higher as all those air conditioners work overtime. We have already seen pricing increases in the PJM BGE Hub and the PJM AD Hub, which will likely continue.
Forward power pricing for 2024 still sits well below the forward power pricing for 2025-’27, with the electricity cost rising the further you go.
FORWARD POWER PRICING IN THE BGE HUB
FORWARD POWER PRICING IN THE AD HUB
