NEW YORK: US natural gas futures jumped about 5% to a one-week high on Monday on forecasts for hotter weather and higher demand next week than previously expected.
That price increase came even though the heat wave blanketing much of the country for the past few weeks eased and with a major hurricane expected to hit Florida on Wednesday.
Tropical Storm Idalia is expected to strengthen into a hurricane later Monday and hit the northwest coast of Florida as a major hurricane with maximum sustained winds of 115 miles per hour (185 kilometers per hour) on Wednesday, according to the US National Hurricane Centre (NHC).
Traders said Idalia would likely knock out power to over a million homes and businesses, which would cut demand for both power and gas later this week.
Florida consumed about 4.4 billion cubic feet per day (bcfd) of gas in 2022, with most of that fuel, about 3.8 bcfd, burned to produce power.
Despite the end of the heat wave that boosted demand in Texas to near record highs over the past couple of weeks, the state’s power grid operator, the Electric Reliability Council of Texas (ERCOT), projected electric supplies would exceed demand by just about 3,000 megawatts around 8 p.m. local time on Monday.
Worries about those tight supplies kept prices at the ERCOT North hub, which includes Dallas, at a still extremely high $1,056 per megawatt hour for Monday, down from a 30-month high of $1,599 for Friday when supplies were expected to be much tighter. That compares with an average of $91 so far this year, $78 in 2022 and a five-year (2018-2022) average of $66 per MWh.
Between Aug. 24 and Aug. 27, tight supplies forced ERCOT urge customers to conserve energy after the sun went down and solar power stopped working.
Extreme heat boosts the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants. In 2022, about 49% of the state’s power came from gas-fired plants, with most of the rest coming from wind (22%), coal (16%), nuclear (8%) and solar (4%), federal energy data showed.
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