Capacity Market Update
- The 2026/2027 PJM Capacity Auction results were released in late July, with prices rising to $329.17/MW-day, slightly above the expected collar max due to a last-minute adjustment.
- The ‘Shapiro Collar’ remains key for capacity auctions through 2029, capping prices at $325.00/MW-day and setting a floor at $175.00/MW-day for the next three auction years.
Natural Gas Market Overview
- Natural gas prices have dipped below $3.00/MMBtu and appear stable in this lower range. Next winter’s gas is now priced about $0.25/MMBtu less than last week.
- This week saw another hefty gas storage injection of +56Bcf, driven by a record production rate of 108.0Bcf/d.
- Forward prices for February and March 2026 have dropped below $4.00/MMBtu, suggesting ongoing softness in the market.
EIA: Natural Gas Storage Report
Natural Gas Production
NYMEX Natural Gas Calendar Strips
PJM AD HUB DAY AHEAD & FORWARD TREND ANALYSIS
NATURAL GAS SETTLEMENT PRICE HISTORY
Demand Drivers
- LNG exports are set for significant expansion: U.S. LNG export capacity will nearly double from just under 17.0Bcf/d today to 33.5Bcf/d by 2030. This jump could significantly tighten domestic supply unless production continues to grow.
- Midwest temperatures are forecast to cool over the next 6-10 days, which should reduce regional gas demand following recent heat waves.
Actionable Strategies
- Consider purchasing small blocks of energy for Winter 2025 and a partial block (around 25%) for next summer as a hedge against volatility.
- Shorter-term contracts focused on 2026 will carry higher capacity premiums. Blending with blocks for 2027–2029 can help lower overall pricing.
- For commercial customers using over 1M kWh/year: Explore managed index products that let you buy energy as prices dip or lock in protection if market signals turn bullish. Focus on minimizing capacity-related premiums in your supply agreements.
Industry Spotlight: Project Developments
- Commonwealth LNG is seeking federal approval to begin site work ahead of a final investment decision expected within the following year. If approved, the project would add 1.5Bcf/d of LNG feedgas demand, targeting an in-service date in 2029.
Weather and Technical Outlook
- After Friday’s short-covering rally lifted September NYMEX gas to $2.966/MMBtu, a bearish weekend weather shift is pushing prices back toward the $2.80s.
- The U.S. is entering a shoulder season, with national cooling demand projected to drop 30% from last week. Week 2 and Week 3 will see the most significant demand loss, especially east of the Rockies.
- Current production remains robust, LNG feedgas demand is wavering, and storage is expected to climb over 200Bcf above five-year averages by Labor Day. This combination keeps near-term fundamentals tilted toward further downside risk in gas prices.
Stay tuned for next week’s update as we track auction developments, gas market movements, and key infrastructure projects shaping the energy landscape. For tailored procurement strategies, connect with TPI Efficiency’s experts.
6-10 & 8-14 Day Weather Forecasts
