Authored by Julianne Geiger via OilPrice.com,

Natural gas power generation hit a record high in the US on July 9th due to extreme heat.

Despite record demand, natural gas prices remain relatively low due to high storage levels.

The surge in gas demand highlights the fuel’s critical role in meeting peak electricity needs.

On July 9, 2024, U.S. power plant operators in the Lower 48 states generated 6.9 million MWh of electricity from natural gas, marking a record high since the collection of hourly data began on January 1, 2019. This surge in natural gas-fired generation was driven by exceptionally high temperatures across the country and a significant decrease in wind generation.

The National Weather Service reported that temperatures on July 9 were well above average nationwide, with particularly high temperatures on the West Coast and East Coast. Concurrently, wind generation plummeted to 0.3 million MWh, substantially lower than the 1.3 million MWh daily average recorded in June 2024.

This data further affirms the essential nature of natural gas as it steps in to fill the electricity generation gap left by renewable energy during periods of high demand.

Wholesale natural gas spot prices fell to record lows in the first half of 2024, pricing data shows, with the monthly wholesale spot natural gas price at the U.S. benchmark Henry Hub falling by 20% to $2.56 per MMBtu between January and June.

So, while July demand hit record highs, dry natural gas production reached new highs in November and December, averaging 106 Bcf/d, leading to an inventory surplus that sent more natural gas into U.S. storage than usual. Production began coming back down (101.6 Bcf/d in April), with May and June injections into storage dipping to averages well below usual. July natural gas in storage, however, was still 17% more than the five-year average for that time of year, EIA data shows, weighing on pricing.

Henry Hub spot nat gas pricing in June averaged $2.53, a strong rebound from March’s $1.49. Prices slumped again in July despite the strong demand and are now sitting just above $2.10.