Weekly Energy Market Update
Date: May 19, 2025
NATURAL GAS SUPPLY
- Strong Storage Build: The EIA Weekly Storage Report showed another robust injection, with +110 Bcf added to natural gas storage. Storage levels are now less than 15% below the five-year average, a significant improvement.
- Price Movements: Despite several weeks of strong storage builds, natural gas prices had been trending upward until last week, when they dropped by $0.55 since May 11.
- Market Drivers: The combination of strong injections, lower demand, and improved supply fundamentals has contributed to this recent price decline.
EIA NATURAL GAS STORAGE REPORT
NATURAL GAS DEMAND
- LNG Exports: LNG demand remains strong, though slightly weaker than in recent months. Exports are just below 15 Bcf/d, about 1.0 Bcf/d lower than a couple of weeks ago.
- Winter Pricing Outlook: Forward pricing for winter 2025-2026 continues to climb, with January 2026 contracts approaching $5.00. Prices could rise further if demand spikes during peak winter months.
ACT FAST: WHAT SHOULD YOU DO?
- Eliminate Premiums: Work to reduce premiums that suppliers add to forecasted components. Start by passing through capacity charges- suppliers can’t accurately predict 2026/2027 capacity costs, so pay actual costs rather than inflated estimates.
- Leverage Pass-Through Savings: If your pass-through capacity decreases, your costs will drop accordingly. Fixed capacity charges, on the other hand, will not decrease.
- Consider Managed Index Solutions: Large users should explore managed index solutions to capitalize on market opportunities.
- NYMEX+ Strategy for Natural Gas: Consider a NYMEX+ approach, where you pay the actual monthly NYMEX price plus a supplier adder for storage and related services. This can help avoid overpaying during periods of market volatility.
2024 INJECTIONS COMPARED TO THE FIVE-YEAR AVERAGE(chart)
NYMEX ROLLING PROMPT MONTH (chart)
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.
RISK ASSESSMENT
- 2026 Price Risks: Remain alert to upside price risks for calendar year 2026, driven by natural gas fundamentals, potential load growth, and tightening reserve margins.
- Near-Term Opportunities: There may be further downside potential for PJM futures in late spring. Risk-averse users may want to lock in recent price declines.
- Long-Term Uncertainty: While fundamentals appear soft, factors such as a potential recession or warmer-than-normal winters could create additional procurement opportunities.
MARKET INSIGHTS
Natural Gas Pricing Trends
- Speculative Influence:
- Current natural gas pricing is being driven more by speculative trading than by underlying fundamentals.
- Storage Impact:
- Last week’s 104-Bcf injection, slightly above expectations, pushed the June contract down by nearly 20¢ intraday, cooling bullish sentiment. Technicals still point upward, and a mild seasonal supply dip may offer support.
- Weather Effects:
- While demand remains mild, a week-over-week increase of 19 cooling degree days (CDDs) is supportive. Temperatures in Minneapolis could reach 90°F next week, with the Mid-Atlantic and Northeast also expected to warm. However, the end of the heating season is fundamentally bearish.
- Spot Prices:
- Physical Henry Hub spot prices are at $3.23, trailing the front-month contract by 36¢. Cheniere’s heavy LNG maintenance in June may also weigh on near-term demand.
- Market Outlook:
- Despite bullish momentum among traders, the fundamental picture for the near-to-medium term remains soft.
Natural Gas Production Snapshot
- Current Production 105.5 Bcf/d
- Day-over-Day -0.3 Bcf/d
- Week-over-Week +0.7 Bcf/d
- Month-over-Month -0.5 Bcf/d
- 30-Day Average 105.6 Bcf/d
- Year-over-Year +5.0 Bcf/d
NATURAL GAS EXPORTS: LNG & MEXICO (chart)
FINAL THOUGHTS
While the market remains volatile, strong storage builds and robust supply are helping to temper price spikes. Monitor price risks for 2026 closely and consider flexible purchasing strategies to manage volatility and capitalize on future opportunities.
Questions or want to discuss your procurement strategy?
Contact our team for a personalized market outlook and risk management review.
Weekly Weather Outlook: May 19–25
Early Week (Monday–Tuesday):
- Northern U.S.: Expect cooler weather as systems progress, with daytime highs in the 50s to 70s.
- Southern U.S.: It will feel like summer, with warm to hot temperatures ranging from the 80s to 90s.
Mid to Late Week (Wednesday–Sunday):
- Midwest & Eastern U.S.: More weather systems will bring mild conditions, with highs mainly in the upper 50s to 70s.
- Western U.S.: A hot ridge will settle in, pushing temperatures into the 70s and 90s, with some areas reaching the 100s.
Overall:
Thanks to mild temperatures across the country, national energy demand is expected to remain light over the next seven days.