Economic Factors
A looming government shutdown remains a concern, with the potential to disrupt both the economy and energy markets. Many federal workers could go unpaid, which could slow consumer spending and GDP growth. Businesses should monitor for ripple effects.
EIA Natural Gas Storage Report
The weekly EIA Natural Gas Storage Outlook report tracks the volume of natural gas in underground U.S. storage, revealing weekly fluctuations and comparison against 5-year averages.
Supply & Demand Update
Natural gas prices moved higher with November’s contract now active, trading near $3.33/MMBtu—up from $2.84/MMBtu at last week’s close. Storage levels are robust: end-of-season inventories could reach 3,949 Bcf, a high not seen since 2016 and about 5% above the 5-year average. Strong production (105.4 Bcf/day—2.2 Bcf/d above last year) and above-average injections have led to well-stocked reserves as the heating season approaches. While short-term storage and supply conditions appear bearish, colder weather could quickly tilt prices upward.
NYMEX Natural Gas Calendar Strips
• The NYMEX 12-Month Strip averages the next 12 months of Henry Hub futures into one price. It’s a powerful indicator of market sentiment, allowing traders (and end-users) to lock in year-long coverage at a blended rate.
Watching shifts in this strip helps gauge the broader direction of gas markets, beyond just the prompt month.
Market Fundamentals at a Glance
- NYMEX Natural Gas: Prompt-month settled at $3.27/MMBtu on September 29, up $0.06.
- Crude Oil: Prompt-month settled at $62.66/bbl, down $0.79.
- Storage: Working gas in storage reached 3,508 Bcf as of September 19, up 75 Bcf from last week, and 203 Bcf above the five-year average.
- Production: Strong and steady at over 107 Bcf/day throughout September.
- Supply/Demand: Slightly favors supply; storage projected to hit seasonal highs by late October.
Economic Factors
A looming government shutdown remains a concern, with the potential to disrupt both the economy and energy markets. Many federal workers could go unpaid, which could slow consumer spending and GDP growth. Businesses should monitor for ripple effects.
Weather Trends: Neutral Outlook
Winter 2025-26 heating degree days are projected to match last year’s total, with notable uncertainty for the Midwest and Northeast. Weather patterns—specifically atmospheric blocking—could tip the season toward colder or warmer conditions, keeping risk balanced for both outcomes. Overall, U.S. temperatures this week skew warmer than usual: cooler northern states see less heating demand, while the southern belt experiences lingering heat and elevated air conditioning usage. Net effect—natural gas demand is steady for now.
Power & Price Movements
- Forecasts for extended warm temperatures and active cash market trading have supported early-week power price increases.
- The latest power market activity demonstrates resilience, with strong liquidations during evening peaks contributing to near-term strength.
- National power demand is expected to remain low next week, with near-perfect fall weather in most regions.
Capacity Rates to Jump Again
PJM’s latest capacity auction results signal rising costs in the region, with AI data center demand a major driver of higher bills and increased volatility. Some forecasts suggest rates could jump up to 60% over the next five years in the PJM area.
