Natural Gas Supply Easily Meeting Increased Demand from Heat Wave

Intense heat that has blanketed the eastern two-thirds of the nation has increased air conditioning demand, which is met through the use of natural gas-fired electric generation.  However, this increase in demand is easily being met with current natural gas supplies. 

Relative to supply, the EIA recently reported that production levels have increased 10.6% or.6.6 Bcf/day over production levels two years ago.  In addition to production, hydropower supplies, which displace the need for natural gas-fired electric generation, have stretched a typical 5-to-6 month season into an 8-to-9 month season, and nuclear power is now operating at just over 92% following the typical spring refueling and maintenance season.  These factors have made meeting short-term increases in demand, caused by the current heat wave, almost a non-event.

Plus, on the demand side, economic reports underscore a struggling economy. The Institute for Supply Management (ISM) Purchasing Managers Index (PMI) registered just 55.3 in June.  The Labor Department reported that non-farm payrolls increased only 18,000 last month, a big disappointment from the expectations of gains in excess of 100,000.  Plus the Conference Board’s Consumer Confidence reading fell to 58.5 in June, dropping 3.2 points from the prior month.

Taking all of this information into consideration, Valerie Wood, President of Energy Solutions, Inc., stated, “With the majority of summer and a busy hurricane season ahead, it is unlikely that natural gas prices will decline to below $4 per MMBtu. But, at the same time, moderating temperatures and slow economic recovery are likely to keep near-term prices from moving over $5 per MMBtu.” 

Additional information about price trends, demand issues, natural gas storage inventories, production levels, rig counts, and much more can be found in the Monthly Edition of The Advisor. Take a FREE, no-obligation 60-day trial to The Advisor and receive the most recent Weekly Edition, as well as the Monthly Edition for July, which contains additional insight into bearish, bullish and neutral factors that affect pricing within the Natural Gas Industry. Learn more by visiting www.energysolutionsinc.com.

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About Energy Solutions, Inc. 

Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.