Gas Stays Hot on Cooling

August 15, 2022

Whatever weather pattern emerges for the remainder of the summer may not matter. It looks like the winter season will begin at relatively low gas in storage. During May, June, and July, the U.S. experienced 9% more Cooling Degree Days versus the prior 10-year average, leading to more consumption of natural gas for power generation. Data for the first week in August has it ranking as the 2nd warmest summer week in several major markets.

EIA estimates that gas consumption in the power sector averaged 36.2 Bcf/d from May through July, 2.1 Bcf/d more than the same time period in 2021 and 3.4 Bcf/d more than the five-year average. Strong demand and lower-than-average storage inventories have put upward pressure on the Henry Hub spot price. Factor in the return of full Freeport LNG export capacity and gas bulls are smiling.