Texas heat wave fuels demand for gas-generated power💡

The first heat wave to hit the United States is directly increasing demand for the electricity Americans use to power their air conditioning. The real heat bomb has already hit Texas, where the Electricity Reliability Council of Texas (known as ERCOT) reported its highest-ever demand for electricity at 80,200 megawatts yesterday after 4.30pm local time. 

ERCOT energy demand climbed this week into the zone of the highest levels since 2022. Historically, gas prices have responded to large variations in demand on the power grid in Texas, which is one of the country's most important energy hubs. Source: Bloomberg

Seasonality indicates a strong bump in current energy demand relative to previous years. Source: Bloomberg

The latest weather forecasts that the heat wave will extend across the US. Furthermore, Bloomberg data shows that high temperatures across the state of Texas will exceed 100 degrees Fahrenheit (37.77 degrees Celsius) on average by the end of the month. Source: Bloomberg

ERCOT is susceptible to extreme weather conditions and has so far managed to provide adequate amounts of power to consumers.  Half of the electricity currently generated on the grid comes from natural gas-fired power plants, with a further 20% from coal and nuclear power plants. Around 11% comes from wind and 14% from solar.

NatGas prices are currently capping a dynamic upward momentum and retesting the 78.6% Fibo retracement of the downward wave initiated in March this year. Source: xStation 5