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First Look - AI Boom Is Driving a Surprise Resurgence of US Gas-Fired Power | Oil Supply is Growing While Chinese Demand Sinks

Oil is higher by more than $1 to start the week
- Prompt WTI is trading just above $70/Bbl, extending gains from last week (As of 8:20 AM)
European refiners scale back amid signs of weak demand (BBG)
- Major refiners in Spain and Italy are cutting throughput rates, adding to signs of weak global demand
- Italian Eni and Spain’s Repsol, which together account for about 13% of Europe’s refining capacity, are cutting processing rates due to weak margins
- Cuts are expected to reach 300 MBbl/d this month and 700 MBbl/d next month
Oil supply is growing while Chinese demand sinks (S&P)
- Delegates at APPEC 2024 focused on how oil producers can maintain market share and higher prices as China's demand growth slows
- OPEC's extension of voluntary production cuts was seen as neutral, but short-term fundamentals remained bearish
- China's oil demand growth forecast is likely to be reduced to around 200 MBbl/d for 2024, much lower than the previous expectation of 380 MBbl/d
- Despite the challenges, refinery expansions in India, China, and Southeast Asia remain promising

Gas trades lower as forecasts showed declining cooling demand and production rebounded from the prior week's lows
- Prompt gas was 1.4c lower to $2.291/MMBtu (As of 8:15 AM)
- Winter ‘24/’25 strip is down 1.1c to $2.968, and the Summer ’25 strip is down 1.2c to $2.992
- Today's European Ensemble shifted colder, with Lower 48 temps dropping by -11.4 F, led by sharp declines in the Northeast (-41.1 F) and Midwest (-13.6 F) (Criterion)
AI Boom Is Driving a Surprise Resurgence of US Gas-Fired Power (Bloomberg)
- US utilities plan 86-100 gigawatts of new gas capacity by 2032, driven by AI data centers and EV demand. "Natural gas is essential for grid reliability," said Dan Brouillette.
- Gas now accounts for 60% of new generation, reversing earlier clean energy projections. "We’re going in the opposite direction," said Kendl Kobbervig of Clean Virginia
- Companies like PacifiCorp have revised their emission reduction targets, lowering goals from a 78% cut to 63% by 2030, and adding over 5 gigawatts of gas generation while canceling 7 gigawatts of renewables
- Furthermore, long-term reliance on gas could lock in methane emissions, increasing power bills by 10% annually, according to DOE’s Jigar Shah