This caused the Henry Hub futures benchmark to rally to record highs at times to levels not seen since 2008, prior to the advent of robust shale production in the lower 48 states.
The Henry Hub futures front-month price closed at $8.10/MMBtu on 19 May, more than 3 times higher in value than 1 year ago, when the Henry Hub price was $2.52/MMBtu.
In May, it was electric power generation that took up the largest share, at 71%, of the demand increase to reflect the hotter-than-normal temperatures and increased cooling demand.
This year, the number of cooling degree days, an indicator of how much demand would be required for warmer weather, reflected temperatures that were 67% warmer than normal compared with the 30-year average, according to Meyer, and this was nearly double in the east and south-central regions.
At the same time of rising gas prices, domestic coal prices in the US have also soared.
He said:
- Natural gas will remain the most important fuel for generating electricity and serve to balancing power demand
US gas production, which is forecast to reach about 95 billion cubic feet (bcf)/day by the end of 2022, meanwhile has incrementally increased but not enough to match a growing pace in demand.
Meyer said:
- While supply has grown, it has lagged compared to demand
