You can feel the heat in the power burn. You cannot feel it in the prompt
A heat dome settled on the southern United States in mid-August. Triple-digit highs. Extreme heat warnings in North Texas. Alerts from the Southern Plains into the Southeast. AGA's electric-weighted cooling degree days for the week ending August 15 were 2.3 percent warmer than last year and 27.5 percent warmer than the 30-year normal.
Texas and Southeast gas-for-power demand both rose 5.4 percent week over week. That is the weather trade. It is real. People ran the air conditioning. Gas plants ran.
Then you look at the national number. Total U.S. demand including exports was down 1.0 percent week over week. Domestic demand was down 1.3 percent. Electric power demand fell 2.0 percent nationally because the West, Northeast, and Rockies were off 8.9, 8.3, and 7.9 percent. The south got hot. The country did not.
Henry Hub noticed the difference. September averaged $2.74 as the prompt. It settled $2.81 on August 19 and was near $2.77 on August 21. A hotter model can gap the contract a few cents. A cooler Midwest and Northeast revision can take it right back. The 50-day moving average around $2.95 never came into play in a lasting way. Since February 1, the prompt has spent more time under $3 than over it.
Cheap gas is winning in power. It is still not scarce
EIA expects U.S. gas-fired generation to rise 30 billion kilowatt-hours, about 2 percent, in 2026, and another 3 percent in 2027. Last year gas lost share when prices jumped. This year the price is low again and gas is taking hours back from coal. Gas still supplies about 40 percent of U.S. electricity. Coal continues to fade.
That is a structural bid. Data-center load and new gas plants are the longer story people want to write. Fine. Write it next year. This August, the structural bid is losing to 111 Bcf per day of dry production and a Freeport-sized hole in exports.
Power burn has been holding above 50 Bcf per day on the hot days, according to desk notes around the August 13 storage report. Canadian imports were around 5.2 Bcf per day that week, then slipped to 3.9 later in the month. None of that drained the surplus. The August 7 week still injected 36 Bcf, fatter than estimates. The August 14 week injected 16 Bcf only because salt storage in the south withdrew.
Shoulder season is the next problem for bulls
NOAA's August 27 to September 2 outlook still leans warm across a lot of the Lower 48, strongest in the Southwest and southern Plains. Near-normal in parts of the Pacific Northwest. That keeps a little power burn in the tape. It does not rewrite September.
Once the calendar kills the cooling load, the only domestic bids left are industrial (flat in the latest AGA weekly) and storage. Storage is already 6 percent above the five-year. EIA's 3,985 Bcf end-October call assumes the injections continue. Bulls need a hurricane in the Gulf or a Freeport surprise. As of August 20, Hurricane Lala was a Pacific storm. The Gulf was quiet.
The Canadian read
Hot Texas does not lift AECO. A national U.S. surplus with a weak southbound pull from Canada is more likely to keep continental gas heavy. What lifts Western Canada is westbound feedgas into Kitimat and, later, Woodfibre and Cedar. Weather in Houston is colour. Takeaway in Kitimat is the plot.
If you need one line for the week: the heat was real, the surplus was in charge, and the prompt stayed in the twos.