Supply Overview
- The latest EIA Weekly Storage report showed a robust injection of 120 billion cubic feet (Bcf) into natural gas storage, narrowing the gap to less than 15% below last year’s levels.
- Natural gas prices for the end of June are trending around $3.25—down notably from recent weeks. However, prices are expected to rebound to $3.70 in July, with the upcoming winter likely to be priced higher than last year.
- Strong storage injections, lower demand, and solid supply fundamentals drive these shifts.
Natural Gas Storage Report
Natural Gas Demand Highlights
- LNG demand remains strong at just under 18 billion cubic feet per day (Bcf/d).
- Winter pricing is on the rise, with January 2026 contracts approaching $5.00. Further increases are possible as we enter higher-demand months.
- Over the next five years, LNG export capacity is set to nearly double—from just under 17.0 Bcf/d to 33.5 Bcf/d by 2030. This expansion could tighten available domestic supply unless production ramps up accordingly.
Actionable Strategies
- Eliminate Supplier Premiums: Focus on passing through capacity costs rather than locking in fixed rates for future years. Suppliers cannot accurately forecast 2026/2027 capacity, so paying actual costs avoids worst-case scenario premiums. If your pass-through capacity decreases, so will your costs.
- Consider Managed Index Solutions: Large users should explore managed index options to remove energy price premiums.
- Hedge Opportunistically: With pricing for 2027 and 2028 currently at or below $40.00 per MWh, consider hedging small blocks in the spring as a form of price insurance.
Natural Gas Production Chart
Market Risk Assessment
- Cautious Outlook for 2026: Upside price risks remain for the calendar year 2026, driven by natural gas volatility, potential load growth, and tightening reserve margins.
- Short-Term Volatility: PJM futures may see further downside into late spring, but risk-averse users might want to lock in recent price declines.
- Long-Term Uncertainty: While fundamentals appear weak, potential economic slowdowns or mild winters could provide more favorable procurement windows.
Near & Mid-Term Price Action
- Speculative Trading Dominates: Recent price moves have been driven more by speculators than by underlying fundamentals.
- Storage Builds Weigh on Prices: A 104-Bcf storage injection pushed June contracts down nearly 20¢ intraday, dampening bullish sentiment. Technicals still point higher, and a mild seasonal supply dip could offer support.
- Weather Impact: Warmer temperatures are forecast, but the end of the heating season is bearish for demand.
- Spot Prices & Maintenance: Henry Hub spot prices are at $3.23, trailing the front-month contract by 36¢. Heavy LNG maintenance is scheduled for June.
- Production Trends: Current natural gas production stands at 106.5 Bcf/d, up 5.1 Bcf/d year-over-year.
NYMEX 12-MONTH STRIP
ALL ABOUT THE NYMEX TWELVE-MONTH STRIP
• The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
• A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction.
• The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
• The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
• The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
• The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.
Electricity Cost Alert
- In June 2025, expect a 15–20% increase in electricity costs due to PJM auction results.
- Rising demand from AI, electrification, and electric vehicles (EVs) is straining the grid, with projections indicating continued demand growth and supply closures over the next seven years.
What You Should Do
- Explore Energy Hedging: Potential for ~15% savings compared to fixed-rate contracts.
- Consult with Experts: Schedule complimentary onsite energy audits to:
- Identify energy conservation measures
- Enhance service reliability and backup solutions
- Evaluate onsite generation options
- Optimize operations to reduce peak usage
Stay tuned for more updates, and contact our energy experts for personalized strategies to manage your costs and risks in this evolving market.
PJM AD HUB DA & FWD TREND ANALYSIS
Weather Forecast and Natural Gas Demand: May 27 – June 3
Over the next week, weather systems will bring showers and thunderstorms to the eastern half of the U.S., keeping daytime highs in the comfortable 60s and 70s. Texas and much of the South will also see cooler temperatures, with most areas reaching the 70s and 80s, although some spots may still experience locally hotter conditions in the 90s.
In contrast, the western U.S. will be much warmer, with temperatures ranging from the 80s to well over 100 degrees in some areas.
With these weather patterns, national natural gas demand is expected to remain light over the next seven days.