Energy Market Snapshot Feb 18, 2025

Energy Market Overview

Unseasonably warm weather continues to put downward pressure on natural gas and electricity prices as we move toward the milder “shoulder months.” Prompt-month natural gas is approaching $3.00/MMBtu, while electricity pricing for March throughJune remains below $50/MWh.
Storage activity has also eased. After a near-record 360 Bcf withdrawal two weeks ago, this week’s withdrawal is projected around 144 Bcf—a drop of more than 50%.
Looking further ahead, 2029 pricing appears more favorable than expected, with much of the year trading below $45/MWh. This could present an attractive long-term hedging opportunity.

Weather and Demand Outlook

Weather Outlook (Feb 18–23)
Much warmer-than-normal conditions will dominate the eastern two-thirds of the U.S. over the next several days, keeping national energy demand low. The western U.S. will see cooler conditions as weather systems move through. By the weekend, colder air will push eastward, boosting heating demand into early next 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.

WINTER 2025/2026 NATURAL GAS PRICING

Market Outlook and Action Items

Monitor next winter’s pricing. While still elevated, keep an eye out for dips below $50/MWh as potential trigger points for small hedges.
Don’t overlook long-term opportunities. Spring and summer 2029 are currently priced low—consider hedging 25–50% of those months.
Plan for grid reliability risks. The 2027/2028 capacity auction fell short of securing enough reserve energy, raising concerns about possible rolling blackouts. Now is the time to evaluate resilience measures like backup generators, solar with battery storage, and power-quality systems.
Take advantage of Demand Response. With capacity costs elevated, enrolling in a Demand Response program can reduce costs and even earn payments for reducing load during peak demand events.

NATURAL GAS PRODUCTION, LOWER 48 STATES

Production currently at 109.0 Bcf/d
D-o-D change: -0.2 Bcf/d o W-o-W change: +1.4 Bcf/d
M-o-M change: +1.8 Bcf/d
30-day average: 105.8 Bcf/d o Y-o-Y change: +2.3 Bcf/d

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

This chart illustrates the trend in wholesale power prices at the PJM AEP Dayton Hub (often abbreviated as AD Hub) in the day-ahead (DA) market compared to forward (FWD) or futures prices over time.

NYMEX PRICE TREND ANALYSIS – NEXT 24 MONTHS

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