Energy Market Snapshot Feb 11, 2025

Weather and Demand Outlook

A chilly pattern will persist across the Great Lakes and Northeast, with highs mainly in the 20s and 30s. The rest of the U.S. remains mostly mild, ranging from the 40s to 70s, while the West experiences unsettled weather with valley rain and mountain snow. As a result, national natural gas demand is expected to stay low over the coming week.

EIA Natural Gas Storage Report

The weekly EIA Natural Gas Storage Outlook report tracks the volume of natural gas in underground U.S. storage, revealing weekly fluctuations and comparison against 5-year averages.

Natural Gas Pricing Swings Sharply Lower

After a volatile start to the year, natural gas prices have taken a steep dive. Last month, the NYMEX settled at $7.46, marking the highest level since the aftermath of Russia’s invasion of Ukraine, when prices briefly spiked above $9.00 in 2022. However, prompt-month contracts for March have since fallen below $3.20, a dramatic 67% drop.

Even a major storage draw of -360 Bcf—the largest in years and coinciding with Winter Storm Fern—failed to slow the market’s downward trajectory. Looking ahead, spring and summer 2029 futures appear especially inexpensive, hovering near $40.00 for April, May, and June.

WINTER 2025/2026 NATURAL GAS PRICING

Market Outlook and Strategy

Electricity pricing for next winter remains elevated, but opportunities may emerge. Keep a close eye on the market and consider small hedges if prices dip below $50.00 per MWh. For longer-term planning, the Spring and Summer 2029months could present a cost-effective window to hedge 25–50% of your expected usage.

Meanwhile, reliability concerns are growing. The 2027/2028 capacity auction failed to secure enough backup resources to meet projected demand, raising the risk of rolling brownouts or blackouts. To prepare, evaluate options such as backup generators, solar-plus-storage systems, and power-quality equipment to maintain operations during grid stress.

Participation in a Demand Response program can also provide value—offering payments for enrollment and bonuses for curtailing energy usage during high-demand events.

NATURAL GAS PRODUCTION, LOWER 48 STATES

Capacity Market Notes

The Base Residual Auction for the 2027/2028 delivery year (June–May) cleared slightly higher at $333.44 per MW-Day. However, for the first time, the auction fell short of securing enough capacity to meet projected demand by more than 6,000 MW.

This shortfall raises reliability concerns looking ahead, including the potential for rolling brownouts or blackouts if capacity doesn’t improve. PJM could even hold a supplemental capacity auction, similar to what occurred in 2015/2016.

NYMEX PRICE TREND ANALYSIS

The NYMEX 12-Month Strip averages the next 12 months of Henry Hub futures into one price. It’s a powerful indicator of market sentiment — allowing traders (and end users) to lock in year-long coverage at a blended rate.

Watching shifts in this strip helps gauge the broader direction of gas markets, beyond just the prompt month.

(PJM) AD HUB DA & FWD TREND ANALYSIS

NYMEX PRICE TREND ANALYSIS – NEXT 24 MONTHS

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