Thursday, July 12, 2012

"Will Natural Gas Power Demand Keep The Lid on Storage?"

Good post:

The natural gas storage story this year is all about increased power burn demand for natural gas. This untypical source of demand for gas has kept storage injection under control in the face of record levels of gas production. This has prevented historically high gas storage levels from hitting the wall. The CDD data tells us that during the last part of June and early July the high natural gas power burn was almost certainly caused by the unseasonably high temperatures seen across the US. Natural gas is therefore being burned for generation in addition to coal rather than in its place.

[...E]ach week that goes by seems to reduce the likelihood that natural gas storage balances will hit the wall in September or October at the end of the storage season. It looks like the industry has dodged the storage bullet one more time – thanks to hot weather.

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