PJM Electricity Futures Slide Amid Softer Gas Prices
- PJM electricity futures fell by an average of $1.35/MWh (down 2%) in July as natural gas costs eased.
- Although high power prices offered some support, lower gas prices pushed futures moderately down, mainly through Cal 2026.
- Cal 2027 futures were relatively steady, dipping just $0.32/MWh.
- Declining winter risk premiums also trimmed prices along the margins.
WINTER 2025/2026 NATURAL GAS PRICING
PJM AD HUB DAY AHEAD & FORWARD TREND ANALYSIS
NATURAL GAS PRODUCTION
Production currently at 106.3 Bcf/d
- D-o-D change: -0.1 Bcf/d
- W-o-W change: -0.6 Bcf/d
- M-o-M change: +0.2 Bcf/d
- 30-day average: 106.0 Bcf/d
- Y-o-Y change: +3.5 Bcf/d
NYMEX NAT GAS CALENDAR STRIPS
Natural Gas Market Update
LNG Feedgas Demand Rises as Cooling Demand Rebounds
- The September gas contract struggled for direction, with $3.00/MMBtu acting as a battleground for bulls and bears.
- Despite mild weather, weak feedgas, bearish EIA storage data, and strong production, Henry Hub prices hovered at $2.99/MMBtu over the weekend.
- Storage surpluses may soon exceed 200 Bcf above the five-year norm, with ample Gulf salt storage ready for late-summer sales.
- Tropics are seasonally awakening, though not an immediate Gulf threat.
- Plaquemines LNG reached 3.1 Bcf/d on Sunday and is expected to ramp up further.
- Daily cooling demand could soar by 5 Bcf/d over the next week, but underlying bearish trends may curb bullish momentum for now.
EIA: Natural Gas Storage Report
- For the week ending July 25, 2025, the EIA reported a 48 Bcf injection—higher than the projected 37 Bcf.
- Total inventories: 3,123 Bcf—123 Bcf (3.8%) below last year, but 195 Bcf (6.7%) above the five-year average.
- Prompt month NYMEX natural gas: $3.042/MMBtu (down $0.003 as of 11 a.m. ET).
- A cold front is cooling the East and Midwest, with a return to warmth expected late next week after milder temperatures.
Natural Gas Production Snapshot
MetricValue
- Current output 106.3 Bcf/d
- Day-over-day -0.1 Bcf/d
- Week-over-week -0.6 Bcf/d
- Month-over-month +0.2 Bcf/d
- 30-day average 106.0 Bcf/d
- Year-over-year +3.5 Bcf/d
PJM Capacity Auction Results (2026/2027)
- Auction total: $16.1 billion (9.5% increase vs last year’s $14.7 billion)
- Drivers: More retirements, greater demand, new weather-related risk metrics, and improved capacity accreditation.
- Clearing price: $329.17/MW-day (with the ‘Shapiro Collar’ capping prices at $325 and a floor at $175 for 2026/27 – 2028/29)
Supply & Demand Trends
- Supply: Strong, with injections of 106.3 Bcf/d for two consecutive weeks. Above-average storage is expected by September.
- Natural gas prices have dipped with growing storage, dropping below the $3.00 threshold at times.
- Demand: Over the next five years, U.S. LNG export capacity will nearly double (17.0 Bcf/d → 33.5 Bcf/d by 2030), tightening the balance unless production increases.
- Weather: Cooler conditions in the Midwest should reduce demand following recent heatwaves.
What Should You Do?
- Strategic hedging: Consider buying small blocks of energy for Winter 2025 and next summer (about 25%) as insurance.
- Contract strategy: Shorter-term contracts for 2026 may cost more, but blending with 2027-2029 prices can lower average costs.
- Capacity charges: Eliminate premium features where possible. Large users (1 million+ kWh/year) should consider managed index products to lock in dips or protect against upticks.
Weather Outlook
- Showers and moderate highs (70s–80s°F) across the northern U.S., minimal 90s confined to the southern tier.
- This spells moderate national electricity demand over the next two weeks.