Supply Highlights
- Strong Natural Gas Supply: Last week saw a robust injection of +46Bcf into storage, outpacing both last year’s number and the five-year average.
- Production Growth: Average production has reached 105.6Bcf/d this year—nearly 2Bcf/d more than the same period last year.
EIA: Natural Gas Storage Report
Demand Trends
- LNG Exports Near Capacity: Liquefied natural gas (LNG) exports have rebounded to almost 16Bcf/d. After spring maintenance, facilities are running close to capacity, sitting less than 3.5Bcf/d away from their maximum output until new export terminals come online.
- Hurricanes and Demand Volatility: As hurricane season intensifies, the electricity and gas markets are shifting. Unlike in previous decades when storms hitting the Gulf disrupted supply, land-based drilling now means hurricanes mainly dent demand by causing widespread power outages. High winds can interrupt LNG shipping, keeping more gas on the domestic market and pushing prices lower.
- Future LNG Expansion: Expect LNG export capacity to almost double, from just under 17.0Bcf/d today to 33.5Bcf/d by 2030. This expansion could significantly tighten domestic supply and production unless output ramps up further.
- Record-Breaking Heat Forecast: Recent heat waves have pushed this summer’s forecast from the 10th hottest on record to a likely Top 3. If this holds, the past three summers will have been the hottest ever recorded.
Market Recommendations
- Smart Procurement: Now may be an excellent window to purchase electricity and gas, especially with long-term contracts. Shorter contracts through 2026 are expected to cost more than deals that blend in lower pricing for 2027–2029.
- Cost Control Strategies: Minimize premium charges in your rate, such as capacity add-ons, wherever possible.
- If your annual consumption exceeds one million kWh, consider a managed index product. This allows you to buy energy blocks when prices dip and shields you from sudden price spikes.
AEP NYMEX HENRY HUB VS AD HUB ELECTRIC
Risk Assessment
- 2026 Price Risk: Remain cautious of possible upward price movements for 2026. A diversified portfolio approach is advisable to navigate ongoing volatility.
- Front-of-Curve Opportunity: There could be further downside for PJM futures into late spring. Conservative buyers may want to lock in recent declines.
- Long-Term Uncertainty: While immediate fundamentals appear weak, factors like a potential recession or warmer-than-expected winters could create better procurement opportunities in the near future.
WEATHER: 6-10- & 8-14-DAY TEMPERATURES
Weather Outlook: July 21–27
Get ready for a hot week ahead! A strong high-pressure system will bring widespread heat to much of the southern two-thirds of the U.S., with daytime highs ranging from the upper 80s to over 100°F—especially scorching in the Southwest and Texas. Cooler relief is expected along the West Coast and in the Northeast, where highs will stay in the 70s and 80s. Most of the country will feel hotter than normal by the end of the week.
Natural Gas Market Update
- Storage and Price Action:
- A recent 104Bcf storage injection, just above expectations, pushed June natural gas contracts down 19.6¢ intraday and slowed bullish momentum. Despite this, technical indicators suggest room for upward corrections, especially with a minor seasonal dip in supply potentially supporting prices.
- Weather and Demand Impacts:
- Weather-driven demand is still mild, but a week-over-week increase of 19 cooling degree days (CDDs) is supportive. Cities like Minneapolis may see 90°F soon, with the Mid-Atlantic and Northeast also expected to trend warmer into mid-to-late May. However, the fading late-season heating demand keeps the outlook bearish overall.
- Spot Market Snapshot:
- Henry Hub physical spot prices at $3.23 remain 36¢ below the front-month contract. Heavy LNG maintenance is scheduled for June. While traders may attempt to fuel a price rally, soft fundamentals are still in play for the near- to medium-term outlook.
Stay ahead by monitoring both short-term weather patterns and long-term infrastructure changes, and consider portfolio flexibility to manage market volatility.