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Natural Gas And The Electric Power Sector: What Are The Latest Trends?

June 3, 2019  

The injection season is in full swing. June contract expired last week and July contract is now the prompt month contract. It is down more than 17% y-o-y and is fundamentally undervalued. However, the whole energy complex has been under bearish pressure lately - partly driven by a classical risk-off trade. Additionally, a 20% drop in the price of Central Appalachian coal has dented natural gas competitiveness on a relative basis.

Will electricity-driven demand from the electric power sector prop up natural gas price during this injection season? In this article, we will look at natural gas usage in the Electric Power sector and will update you on the latest trends.

Why should natural gas traders care about the latest trends in the Electric Power sector (EP sector)?

The simple answer is because the EP sector is the primary consumer of natural gas. Its share in the annual demand structure is more than 31% (on a 12-month basis), while its share in the injection season demand is close to 50% (see the charts below).

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