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market snapshot
Market Snapshot Weather Forecast

MIDDLE AMERICA GETS SOME RELIEF

weather map
US Weather Outlook

While this summer had brought record heat to many parts of the U.S., this may be the new normal. Temperatures have increased by 1.7 degrees Celsius (almost three degrees Fahrenheit) since 1970. The atmosphere can store about 7 percent more water for every degree Celsius. This is why we have fewer rainstorms, but these storms dump much more water when it does rain.

The high-pressure high-temp bubble in the Plains States is finally dissipating, allowing cooler temperatures across the Midwest and down into Texas. High temperatures in the Pacific Northwest will drive temperatures into the high 80s and low 90s next week.

Market Snapshot Natural Gas Forecast

ARE WE PAST PEAK SUMMER DEMAND?

LOWER DEMAND BUT INCONSISTENT PRODUCTION KEEP PRICING HIGH

Henry Hub pricing natural gas
Henry Hub Natural Gas Pricing
  • Pricing eased from a high of $8.35 last week to $7.85, mainly on the revision of mid-August forecasts.
  • Some forecasters are now saying that we may be past peak summer demand which should help our supply problem.
  • Production problems have countered this. For example, the EIA had projected average production of ~97-98 Bcf/d, but gas producers have struggled to maintain production totals of 96 Bcf/d throughout the year due to various issues.

NATURAL GAS STORAGE REPORT

EIA Natural Gas Storage Report
EIA Natural Gas Storage Report

The possibility that we may be past peak summer demand has brought the pricing down about $0.50 in the last week. As a result, electricity pricing has also dropped roughly $5.00/mWh in the BGE and AD Hubs.

There is no significant event insight to bring energy 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; an LNG facility shutdown or a hurricane could all affect demand and lower pricing. A sustained heat wave and a shutdown in production anywhere along the line could also bring it back up.