2Q 2019 –
- US power demand hit record highs in July largely driven by increases in the Midwest and Northeast. Despite strengthening prices in regional markets, the overall gas market in the US remains weak. BTU Analytics expects this trend to continue as unseasonably cool weather across the United States and potential tropical storms’ impact on the horizon could lead to weaker Henry Hub pricing as the calendar rolls into August and September. The demand decrease coincides with the expected early startup of Kinder Morgan’s Gulf Coast Express pipeline which could bring up to 2 Bcf/d of Permian gas to the US Gulf Coast placing further downward pressure on Henry Hub prices.
- Despite being mechanically complete on both sides of the border, the Sur de Texas – Tuxpan pipeline has yet to enter service due to arbitration proceedings filed by Mexico’s CFE. The delay is yet another for Mexico infrastructure that could potentially provide relief to Waha prices.
- Low prices are incentivizing slower drilling activity as producers struggle to meet earnings expectations. However, if strong winter demand fails to materialize, it may not be enough to prevent a significant decline in pricing later this year.