Extreme cold weather in the central US next week is set to boost natural gas demand to record highs, leading to a surge in power and gas prices. This comes as electricity demand rises and gas supplies are cut due to freezing temperatures. As a result, power grids may face significant challenges during the cold snap. Both PJM Interconnection, the largest US power grid operator, and the Electric Reliability Council of Texas (ERCOT), the Texas grid operator, have issued weather watches from January 14 to 17. ERCOT has warned of higher electricity demand and the possibility of lower reserves, although it expects normal grid conditions. Freeze-offs at production sites in Colorado, Wyoming, and North Dakota have already caused a decrease in gas supplies. Recent data shows that US gas output dropped to a 10-week low of 104.5 billion cubic feet per day (bcfd) on January 11, a decrease of 3.7 bcfd over the past four days. Additionally, US gas demand, including exports, is projected to reach 171.4 bcfd on January 15 and 174.5 bcfd on January 16, surpassing the previous all-time high of 162.5 bcfd set in December 2022. With power prices and natural gas demand on the rise, the extreme cold weather presents a significant challenge for energy markets in the US.
Extreme Cold Weather to Boost Natural Gas Demand, Power Prices Soar, US
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