U.S. gas prices hit at a 14-year seasonal high as the country battles persistent high temperatures and resultant soaring cooling demand for gas.
That’s what Rystad Energy Analyst Karolina Siemieniuk highlighted in a market note sent to Rigzone late Tuesday, which outlined that Henry Hub gas prices rose to $8.99 per MMBtu on July 26, before falling to $8.283 per MMBtu on August 1.
At the time of writing, Henry Hub gas prices were hovering just under $8 per MMBtu. The commodity closed above $9 per MMBtu in June but dipped to under $6 per MMBtu in July.
In the note, the Rystad analyst pointed out that, in the west, prolonged droughts and reduced hydro-electric generation had contributed to elevated gas use.
“At the same time, the U.S. has become the largest LNG exporter, with 42 million tons of LNG exported in the first six months of 2022, about six million tons more compared with the same period last year,” Siemienik stated in the note.
“The U.S. has since mid-June not been exporting at its full capacity due to the ongoing outage at the Freeport LNG facility in Texas, which has affected 15.3 million tons per annum of capacity. Despite this outage … current U.S. gas inventories are below the five-year average and last year’s number,” the analyst added.
“U.S. underground storage as of week 29 (July 22) was at 2.416 trillion cubic feet, which is 260 billion cubic feet below last year’s level. In the absence of the Freeport LNG outage, gas inventories could have been even lower and prices in the U.S. even higher,” Siemieniuk continued.
The analyst also warned in the note that, “with Europe still scrambling for LNG, prices are likely to stay elevated for the near future”.
In a separate market note sent to Rigzone on July 26, Siemieniuk noted that the Henry Hub gas price settled at $8.7 per MMBtu on July 25 due to further cuts to Nord Stream 1 supplies to Europe and an upward trend of gas-for-power demand for cooling usage during the “blistering summer”.
“It is reported that current gas-for-power demand is projected to average about 40 billion cubic feet per day in late July and the U.S. could require more domestic gas consumption in the coming weeks if a heatwave persists in Midwestern states,” Siemieniuk warned in the note.
In another market note sent to Rigzone on July 13, Rystad analyst Ryan Kronk highlighted that Texas was grappling with another heatwave, with highs reaching 114 degrees, “placing extreme pressure on a power grid that has come under scrutiny in recent years for its ability to handle increased demand”.
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Original Article: https://www.rigzone.com/news/usa_gas_prices_hit_14_year_seasonal_high-03-aug-2022-169844-article/?amp