Weather Outlook
- From August 12 to 18, the northern United States will experience near to slightly cooler than average temperatures, with weather systems bringing showers and thunderstorms. Expect highs ranging from the 60s to 80s, resulting in light energy demand. Conversely, high pressure will dominate the country’s southern half, leading to very warm to hot conditions with temperatures soaring into the upper 80s to 100s, driving strong energy demand. Overall, national energy demand is projected to be moderate to high over the next week.
Natural Gas Market Update
- Production and Pricing: Natural gas production has rebounded, exceeding 103 Bcf/d. However, this increase might be temporary as prompt month prices remain around $2.00.
- Injection Rates: Injections are significantly below the five-year average as summer demand for gas increases. With prices for August and September near $2.00, now is an opportune time to consider a gas agreement or a NYMEX+ strategy.
2025/2026 Capacity Auction Results
- Impact on Electricity Costs: Recent capacity auctions across the PJM grid highlight that capacity costs do not directly affect electricity prices, which are still driven by supply and demand. Capacity charges are either included in your electricity rate or listed separately.
- Contract Implications: Existing contracts through 2025/2026 will see increased capacity costs due to changes in laws or regulations, as allowed by exemption clauses.
- Efficiency Opportunities: The rise in capacity costs presents an opportunity to invest in efficiency projects, such as LED lighting and control systems, to reduce usage and mitigate costs.
- Future Supply Needs: To lower capacity costs, new supply generation must be developed, which could take 4-6 years per source. This extended timeline will likely keep auction prices high in the coming years.
Why Consider Buying Now?
- LNG Demand: LNG exports and power burns have surged recently, reducing the availability of supplies. Freeport is back online, contributing over 2 Bcf/d. Exports are nearing 13 Bcf/d and may continue to rise as facilities complete seasonal maintenance. Including the Mexican NG pipeline, U.S. exports could reach 20 Bcf/d by 2030.
- Weather Demand: Record-breaking temperatures have been observed, with July 21, 22, and 23 each setting new records for the hottest days in recorded history. This follows the hottest June on record and a record-breaking July, indicating a trend of increasing weather-related energy demand.
Stay informed and consider strategic energy decisions in light of these developments.
