First Look: ERCOT issues weather watch for May 8 as peak load surpasses 70 GW
May 08, 2024
Oil is trading lower, around $77.75, extending losses from yesterday
WTI continued yesterday’s selloff during overnight trading, falling as low as $77 before rebounding slightly
The US dollar is trading higher, which often leads to bearish pressure on crude prices
Prompt Brent time spreads, which are often an indicator of market strength or weakness, have fallen to the lowest level since March
Asian oil markets show signs of weakness (BBG)
Diesel refining profit margins in Asia have shrunk, weakening prices of Middle Eastern crudes often used in the region
Oman crude differentials are about $1/Bbl lower month-over-month, while Murban diffs are at a five-week low
The weakness comes despite Saudi Arabia’s recent increase in its official selling price to Asian buyers
EIA sees a balanced oil market in 2024 (BBG)
The agency sees non-OPEC production rising to offset the production cuts from OPEC
The EIA lowered its demand forecast, which would put the global oil market in a deficit of only 80 MBbl/d in 2024
Natural gas prices trade higher amid production curtailments and ongoing spring pipeline maintenance
June ’24 Henry Hub is up 4.6c this morning to trade around $2.253/MMBtu
The Summer ’24 strip is up 3.1c to $2.555 and Winter ‘24/’25 strip is up 2.4c to $3.496
Natural gas production in the Lower 48 remains low, supporting gas futures, with Tuesday's Woodmac estimate at 94.6 Bcf/d, about 3 Bcf/d below the previous seven-day average and over 12 Bcf/d below last winter's record highs (NGI)
Today's Euro Ensemble model was moderately cooler but showed varying temperatures across regions
Lower 48 pattern remains on track for cool temperatures late this week, followed by a return to near-normal temperatures by mid-next week
ERCOT issues a weather watch for May 8 as peak load surpasses 70 GW (ERCOT, Criterion)
ERCOT has issued a "Weather Watch" for May 8 due to high temperatures, expected maintenance outages, and the potential for lower reserves while maintaining normal grid conditions
A "Weather Watch" is the first level of four grid condition alerts, preceding voluntary conservation, conservation appeal, and energy emergency alerts
As of Tuesday afternoon, peak load projections exceeded 70 GW, near a May record, as South-Central temperatures hit 80°F, at the upper end of historical load under similar conditions
Early summer temperatures could set new records in a few months following 2023's peak load that topped 80 GW for consecutive weeks, reaching over 85 GW at its highest
Williams highlights strategic pipeline expansions in 1Q 2024 earnings (Criterion)
Transco expansions are adding 3.1 Bcf/d across eight projects. The 829 MMcf/d Regional Energy Access Phase 2 and 423 MMcf/d Southside Reliability Enhancement are under construction and will be online in 4Q24
Four additional Transco expansions will add capacity in 2025, including the Southeast Energy Connector (150 MMcf/d in 2Q25), Commonwealth Energy Connect (105 MMcf/d in 4Q25), Texas to Louisiana Energy Pathway (364 MMcf/d in 1Q25), and Alabama Georgia Connector (63.8 MMcf/d in 4Q25). The Southeast Supply Enhancement will add 1.59 Bcf/d in 4Q27
Haynesville developments are set to increase capacity by 550 MMcf/d via the Haynesville West and Mansfield expansions by year-end 2025. The Louisiana Energy Gateway pipeline remains on track to add 1.8 Bcf/d in takeaway in 2H 2025 despite a legal dispute with Energy Transfer
Additionally, MountainWest expansions will add over 400 MMcf/d, including the Uinta Basin Expansion (113 MMcf/d in 3Q24) and the Overthrust Westbound Expansion (325 MMcf/d in 4Q25)
Get market insights delivered to your Inbox every day!
