Weather and Demand
We anticipate a retreat in energy demand and pricing as the recent cold front passes. The European forecast model suggests one more cold spell before the new year, while the American model predicts milder temperatures for at least the next 30 days. This long-term mild weather outlook may be causing the market to sell off early, with January prices already down to $3.25 at the start of the week.
Temperature Forecast (December 9-15)
- Early Week: Mild conditions across the southern and eastern US
- Mid-Week to Weekend:
- Midwest, Ohio Valley, and East: Frosty weather system bringing rain, snow, and colder temperatures
- Highs: 10s to 30s°F
- Lows: -0s to 20s°F
- Brief cold spell in North Texas, the South, and Southeast (lows 20s-30s°F)
- Western US: Mild to pleasant conditions (highs 40s-70s°F)
- Late Week: Milder temperatures expanding to the central US as high pressure strengthens
Supply and Political Impact
Regarding potential changes in gas and oil prices with a new administration, it’s important to note that the election will likely have minimal impact. The President does not control oil and gas production, which is managed by private companies prioritizing profits.
LNG Demand
LNG exports have reached 14.9 Bcf, approaching the record set in January 2024. Venture Global is preparing to launch commercial LNG exports from its Plaquemines LNG facility, potentially setting a new LNG record by December or January 2025.
NATURAL GAS STORAGE REPORT
Future Electricity Costs
- June 2025: Expect a 15-20% increase in electricity costs due to PJM auction results
- Mid-2026: Morgan Stanley forecasts a 157% increase in capacity
- Next 7 Years: Significant demand-side increases expected due to:
- AI manufacturing growth
- Electrification
- EV adoption
- Supply closures during the same period may further impact costs
Strategies to Offset Increasing Costs
- Energy Hedging: Potential 15% decrease compared to fixed rates
- Free Onsite Energy Audits: Engage with energy experts
- Alternative Energy Solutions: Explore onsite generation options
- Operational Improvements: Focus on reducing peak building usage
By implementing these strategies, businesses can proactively manage and potentially mitigate the impact of rising energy costs in the coming years.
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.
AD HOUND THE CLOCK FORWARD POWER PRICING ($/MWh)
NYMEX ROLLING PROMPT MONTH
