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Decline in coal generation to boost summer gas use: EIA

  • Märkte: Coal, Natural gas
  • 09.05.23

US natural gas consumption this summer is forecast to be the second largest on record, largely driven by a decline in available coal-fired generation and lower gas prices, according to the US Energy Information Administration (EIA).

US gas use for electricity generation typically peaks in the summer months as higher temperatures spur more air conditioning use.

Higher gas-fired power use this summer will be a result of a decline in coal-fired electricity generation, relatively lower gas prices and overall higher generation use because of expected hotter-than-normal weather, the EIA said today in its monthly Short Term Energy Outlook. Coal consumption in the electric power sector was expected to fall by 13pc this year compared with 2022 as more coal plants retire and more renewable generation comes on line.

Gas use for the US from May through September was expected to average 38 Bcf/d (1bn m³/d), lagging only last summer's record of 39 Bcf/d.

Gas consumption for electricity generation during the summer of 2024 was expected to decline by 2pc and average about 37 Bcf/d as more renewable generation sources become available throughout this year and next.

Injections into inventories from April through October will likely lag the five-year-average because of higher demand for natural gas to meet electric power sector demand.

US gas inventories totaled 2.1 Tcf at the end of April, 19pc above the five-year-average. Storage was forecast to increase by 1.6 Tcf from the end of April to reach about 3.8 Tcf by the end of October, 4pc more than average.

Inventories have swollen relative to average levels this year thanks to rising gas production and a mild winter that has ultimately led to lower gas prices.

Henry Hub spot prices were expected to average $2.35/mmBtu this month and average closer to $3/mmBtu in July and August, when power demand peaks, the EIA noted. Prices should average $3.10/mmBtu by the third quarter of this year and average $3.59/mmBtu by the final quarter of 2023.

Above-average temperatures in the eastern and central US this past winter and spring led to smaller natural gas withdrawals compared to the average for those regions.

Gas inventories in the east, midcontinent and south central regions were well above the five-year-average by the end of April, with withdrawals in the south central region ending April at a 30pc surplus.

For all three regions, the EIA expects inventories to remain above the five-year-average throughout the injection season and end October at a combined 120 Bcf, or 4pc above average.

The western US experienced colder-than-normal weather this winter that ultimately led to larger-than-average withdrawals.

Pacific and Rocky Mountain inventories this winter declined by more than average, causing the deficit to the five-year-average to reach more than 40pc by the end of March. The colder-than-normal weather, along with limited availability for hydropower for electricity generation in the Pacific region, led to more gas consumption. However, injections for those two regions last month topped the five-year-average.

The EIA expects Pacific and Rocky Mountain inventories will increase by almost 300 Bcf from the end of April through the end of October, placing storage at 2pc above the five-year-average by the end of injection season. This significant build in storage reflects inventory management by regional storage operators as they try to build inventories to have sufficient storage to meet winter requirements, the EIA said. High hydropower generation in the west should also reduce natural gas demand in the power sector, which would further support regional gas injections.


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