Market Insights > First Look

First Look - Spring heat wave to boost gas power demand

Oil extends gains on trade pause
- WTI prompt-month contract rose $0.79 to $62.74/Bbl Tuesday morning (7:45 AM CT)
- President Trump begins his Middle East tour Tuesday with a stop in Saudi Arabia, the de facto leader of OPEC+
  - Last week, OPEC+ announced it will raise production by 411 MBbl/d for the month of June, in part to discipline members who exceed their quotas
- April core CPI rose 0.2% m-o-m, below expectations of 0.3%, per the Bureau of Labor Statistics
US LPG exports to China could rebound by late June (Vortexa)
- Shipments may return to seasonal norms of ~600 MBbl/d in 2H June amid 90-day tariff pause
- Tariff hikes after the pause are “highly unlikely,” says Vortexa’s Samantha Hartke
Russian crude revenue slumps despite export rise (Bloomberg)
- Russia’s oil prices fell for a fifth straight week, bringing shipment value near a two-year low
- Crude flows rose 3% over the four weeks ending May 11, reaching 3.42 MMBbl/d
- Moscow’s crude export value rose $30 million to $1.23 billion in the week ending May 11, as higher volumes offset falling average prices

Natural gas is trading higher, with prices still near a multi-week high
- LNG feedgas demand remains lower at 15 Bcf/d, with Cameron LNG maintenance continuing and a drop in inflows to Corpus Christi LNG
  - Warmer temperatures along the Gulf Coast should keep LNG feedgas demand limited, as the facilities are less efficient when it is warmer
- Gas demand in the Southeast and South Central regions will spike to the highest level in months this week, driven by the power sector
- Kinder Morgan is performing maintenance on Permian Highway Pipeline from May 13-26, which could limit supply by 0.5 Bcf/d
  - Pipeline maintenance in the Permian often leads to weakness in Waha Basis cash prices
Spring heat wave to boost power demand (Bloomberg)
- A heat wave is descending on the Central US, with temperatures rising sharply from Canada to Texas
- More than 130 daily high temperature records may be broken or tied, with a US Weather Prediction Center forecaster saying, “It’s going to be hot for a while, and the longest duration is going to be Texas.”
- Electricity demand on the ERCOT grid is forecast to reach 82.2 GW, with the all-time summer record being 85.5 GW
- Lower 48 power sector gas demand is expected to reach as high as 35 Bcf/d this week