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Coronavirus: impact on US gas markets (10 July update)
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Report summary
Gas demand is recovering but power burns would have been even higher Record heat has projected July 2020 to be the hottest month on record. Daily US power demand is setting record highs of 45 bcfd and may increase further with extreme heat projected in coming days. Yet, on a weather normalized basis, power demand is still under-performing modelled expectations. Add in cash prices deeply under $2/mmbtu and incremental economic coal-to-gas displacement would have resulted in even higher gas burns. Mexico power demand, highly correlated with US gas pipeline exports, have recovered with the re-opening of its economy. However, July month to date gas burns are still lower than last year, despite the hotter weather and additional gas fired power plants coming online. Will the pace of US gas demand recovery pick up even further? Or will the recent “second wave” stymie efforts? We will continue to monitor and refresh our prior insight as noteworthy changes occur.
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