Henry Hub cash prices to rise more than 40% in 2021
Coal increases market share in MISO, SPP, PJM and ERCOT
Energy saving in the USA 2 billion cubic meters Feet per day, about 7%, YTD
Higher gas prices have already reduced the share of US electricity burned this year, but the recent easing of the Henry Hub forward curve could slow that trend towards the end of this summer.
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From the beginning of the year to date, cash prices at Henry Hub have traded at an average of about $ 2.65 per million BTU excluding a range of emissions above $ 4 – all recorded during the historic production freeze this winter in February. Compared to 2020, benchmark prices are up about 80 cents this year, or more than 43%, according to S&P Global Platts.
The rise in gas prices in 2021 gives coal an edge among the dual-fuel generators operating in the territories of the largest independent system operators in the United States.
The largest gain in market share for coal has occurred in MISO, where it will account for approximately 40.3% of total production in 2021, up from 30% last year. Coal’s market share in SPP, PJM and ERCOT is also higher this year compared to last year, according to S&P Global Platts Analytics – up about 7.2 percentage points, 6.4 percentage points and 3.9 percentage points, respectively. …
While simulated US combustion data shows a corresponding significant decrease in generator gas demand this year, the base sample suggests an even greater reduction in burns when temperature is taken into account.
According to Platts Analytics, at the beginning of April in the United States, electricity fired on gas averaged about 27.3 billion cubic meters. Feet per day. This is about 2 billion cubic meters. Feet per day, or nearly 7%, compared to the 2020 average.
With temperature fluctuations, the decline this year seems a bit big. At a population-weighted temperature of 45 degrees Fahrenheit, the selective combustion capacity this year was about 20.2 billion cubic meters. Ft per day compared to about 22.3 billion cubic meters. Feet per day last year. When simulating, a decrease in selective demand by 2.1 billion cubic meters. Feet per day this year will likely lead to an even greater drop in overall gas demand from US producers.
Following the growth of forward gas markets in February this year, the Henry Hub-2021 balance curve has since lost more than 22% of its value, hitting the latest level of just $ 2.62 per million BTU, according to M2MS data from S&P Global Platts. As the US market continues to rally, gas prices may face further downward pressure this summer.
In April, US gas production averaged over 92.5 billion cubic meters. Ft / day as the recent addition of rigs in the Permian, Haynesville and other basins continues to push production from a pandemic low of 84.5 billion cubic meters. Feet a day last summer.
In the warehouse market, a recent increase in production has met with mild temperatures in late winter and early spring this year, which has significantly reduced the stock shortage this winter. According to the US Energy Information Administration, as of the reporting week ending March 26, US storage capacity was estimated at 1.764 trillion cubic feet, just 36 billion cubic feet below the five-year average – compared with a 180 billion cubic foot deficit in the United States. end of February.
Assuming that the recent increase in supply continues to weigh on benchmark gas prices, recent forecasts from Platts Analytics, suggesting a decrease in the demand for electricity under normal weather conditions this summer, by about 2 billion cubic meters.