uploads///elec consumption

Increase Expected: Electricity Consumption and Natural Gas Flows

By

May. 5 2015, Updated 9:57 a.m. ET

Electric power plants

Gas flows to electric power plants increased by 2.3% to 20.3 Bcf (billion cubic feet)—compared to the previous day. The gas flows to electric power plants have been 14% more than the levels last year. Gas deliveries to the residential and commercial segment also increased from the previous day.

The warm weather is higher than normal. It’s driving the cooling demand. As a result, electrical consumption is increasing. It’s expected to increase more in the near term. The demand for natural gas from gas powered electric plants is expected to increase. Similarly, lower natural gas prices are causing coal plants to switch to natural gas power plants. This will also increase the demand for natural gas.

Article continues below advertisement

US stockpile report

Last week, the EIA (U.S. Energy Information Administration) published the weekly natural gas storage report on April 30, 2015. The weekly natural gas in storage increased by 81 Bcf to 1,710 Bcf from 1,629 Bcf. The next natural gas storage report will be released on Thursday, May 7, 2015.

The market estimates an increase in gas inventories by 70 Bcf for the week ending May 1. The current stockpiles are more than 80% above the level of 969 Bcf last year. However, the five-year average for natural gas inventories is at 1,785 Bcf. The better-than-expected inventories will put pressure on natural gas prices.

The Energy Select Sector SPDR ETF (XLE) and the Spider Oil and Gas ETF (XOP) diverged from natural gas’ price movement yesterday. They fell by 0.25% and 1.17% at the close of trade. Energy companies like Stone Energy (SGY), Memorial Resource (MRD), and SM Energy (SM) are positively impacted by the increase in natural gas prices. These companies have a natural gas production mix that’s greater than 46% of their production portfolio. They account for 4.18% of XOP.

Advertisement

More From Market Realist

  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • Woman working on a laptop
    Macroeconomic Analysis
    Why NOBL ETF Could Offer Upside Potential in 2021
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.