Recent days’ have been at or above those of 2019.
Hot weather in the last two weeks sent electricity demand up near normal levels for this time of year, even after controlling for temperature. Gas demand has performed even better.
The chart below shows total electricity demand (i.e. “load”) for the U.S., compared to the average temperature across the country. The green dots low on the chart, in the 50-70 degree Fahrenheit range, show how social-distancing and commercial closures suppressed electricity demand in late spring. However, just as summer heat arrived, total load snapped back up to normal (yellow and red markers).
With more power demand, gas demand can achieve higher numbers, too. The chart below again shows average U.S. temperature, but total gas-fired generation is on the vertical axis.
Early in the year, gas-fired generation was higher than in 2019, but collapsed to prior-year levels due to Covid-19. Recently, with average daily temperatures near 80 degrees, gas demand has typically been at or above last year’s, at the same temperature.
This is good news for the rest of 2020’s natural gas supply-demand balance. Power has been supporting this market during summer (see our notes in the AEGIS Factor Matrix), and it could play an important role this fall.
But we should note some caution: If prices rise, some of that gas demand could be lost to natty’s nemesis, coal. Therefore, we don’t consider these developments in the power sector as bullish, but rather a price-supporting mechanism that could keep prices afloat for the balance of 2020.