US gas consumption may rise by 5pc: EIA

Market: Coal, Natural gas
12/09/23

US natural gas consumption this month was expected to rise by 5pc from last September, setting a new record for September gas consumption, the US Energy Information Administration (EIA) said today.

US gas consumption in September was forecast to average 80.5 Bcf/d (2.28bn m3/d), the EIA said in its monthly Short-Term Energy Outlook(STEO). This would be the third straight month of record gas consumption in the US, following records in July, at 86.5 Bcf/d, and August, at 86.7 Bcf/d.

The EIA's forecast for US gas consumption in 2023 was 89.7 Bcf/d, up by 1pc from a year earlier and a new annual record. The increase was driven by higher gas consumption this summer, which was caused by decreased coal generation and higher temperatures. The heat pushed up demand for power to run air conditioners, while low gas prices have made gas more competitive as a power generation source relative to coal.

Low gas prices this year were driven by high gas production and low heating demand at the beginning of the year, which have created an oversupplied market.

Costs for coal-fired generation in 2023 were up by 10pc in today's STEO from the September 2022 STEO, while costs for gas-fired generation this year were half of what was predicted a year earlier.

The high temperatures and reduced coal-fired generation led the EIA to revise its forecast for gas consumption in the electric power sector. In today's forecast, US gas-for-power consumption in 2023 was expected to average 35.3 Bcf/d, up by 1.5pc from last month's forecast. US gas-for-power consumption in 2024 was also revised upward by 1.3pc to 33.9 Bcf/d.

Total US energy-related CO2 emissions in 2023 were forecast to fall by 3pc from a year earlier, primarily driven by reduced use of coal, the EIA said. The decline in coal-fired power generation was caused by planned retirements of coal-fired power plants and coal-to-gas switching, which accelerated because of gas' cost competitiveness.

Population-weighted cooling degree days, a measure of cooling demand, in the US in August were up by 1.6pc from the seasonal norm, according to the National Weather Service.

Spot gas prices at the US benchmark Henry Hub in Louisiana were forecast to average $2.58/mmBtu in 2023 and $3.24/mmBtu in 2024. US LNG exports were forecast to average 11.6 Bcf/d in 2023 and 13.15 Bcf/d in 2024.

By Julian Hast

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