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Weekly Energy Industry Summary

Commodity Fundamentals

Week of March 31, 2025

By The Numbers:

  • NG '25 prompt-month NYMEX settled at $4.11 per MMbtu, up $.05/MMbtu, on Monday, March 31.
  • WTI '25 prompt-month crude oil settled at $71.48 per barrel, up $2.12 per barrel on Monday, March 31.

Natural Gas Fundamentals - Neutral/Bearish

  • Prompt NYMEX natural gas settled at $4.11per MMbtu, up $.05/MMbtu on Monday, March 31.
  • The supply/demand balance is loosening as residential/commercial demand falls along with power-generation demand.
  • Production of natural gas, year-to-date 2025 is 103.8 Bcf per day, versus 103.2 Bcf per day for the same period last year.
  • The weather is very seasonal, not a big anomaly, and diminishes rapidly as a market driver.  
  • Electric power generation demand for gas, year-to-date, averaged 33.2 Bcf per day versus 30.9 Bcf per day for the same period last year.
  • Residential/commercial demand for gas year-to-date averaged 40.2 Bcf per day versus 31.5 Bcf per day for the same period last year.
  • LNG exports month-to-date averaged 15.3 Bcf per day versus 13.4 Bcf per day for the same period last year.
  • Natural gas for the remainder of 2025 is averaging $4.46 per MMbtu.
  • Natural gas strip pricing for 2026 through 2030 is: $4.44, $3.87, $3.59, $3.46, $3.32 per MMbtu respectively.

Crude Oil - Neutral/Bullish

  • NYMEX (WTI) prompt-month crude settled at $71.48/bbl, up $2.12/bbl on Monday, March 31.
  • Trump over the weekend threatened tariffs on buyers of Russian crude oil if Vladimir Putin does not get to the peace table.
  • Trump said military action against Iran is an option if Iran does not give up its nuclear ambitions.
  • Trump threatened the Houthis directly and Iran indirectly relative to attacks on shipping origination through the Suez Canal.
  • These statements and actions (the U.S. has moved to attack various Houthi missile and drone installations in Yemen) lifted crude prices.
  • OPEC plus is expected to continue a modest increase to production in May.

Economy - Neutral

  • The University of Michigan reports its consumer sentiment index fell to 57 this month, down from 64.7 in February and its lowest level since 2022.
  • Consumer sentiment is partly based on the potential effects of tariffs on consumer goods.
  • Tomorrow major tariffs will kick in across many industries and for many countries.
  • Core inflation for February was 2.8%, higher than expected.
  • Personal income was up 0.8% in February against an estimate 0.4%.
  • Predictions relative to a recession are rising among several banks.
  • Bank of America forecasts U.S. economic growth at 2% for the remainder of the year.
  • "Transitory" is back as the Fed does not expect tariffs to have long-lasting inflation impacts, CNBC reports.

Weather - Neutral

  • The pattern flips in the coming week with warmth moving east and a cooler west.
  • Next week, a chilly trough moves east -- the southeast warms up and the west warms up.
  • Longer range; warmth grows in the south, the north remains "seasonal with a chilly bias."

Weekly Natural Gas Report:

 
  • Inventories of natural gas in underground storage for the week ending March 21, 2025 are 1,744 Bcf; an injection of 37 Bcf was reported for the week ending March 21, 2025.
  • Gas inventories are 122 Bcf below the five-year average and 557 Bcf less than the same time last year. 
Values reflect week ending Mar. 28, 2025
Prices reflect week ending Mar. 28, 2025

Weekly Power Report:

Mid-Atlantic Electric Summary

  • The Mid-Atlantic Region’s forward power prices were up slightly on the week with more support on the outer terms than the near terms.   After selling-off early last week, natural gas prices moved back up over $4.00/MMBtu amid the April contract expiry, colder weather forecasts than previously expected and record LNG exports.  The weather forecasts picked up demand gains over the weekend as the pattern became more amplified.  This brings unseasonable warmth to much of the eastern half of the nation this week with cooler air in the West.  The signals switch next week with blocking (ridging) combining with chilly air coming down from the northern latitudes into the eastern half of the nation.  Future power prices for the 2026 term were flat over the past week but were 1% higher for the 2027-2030 terms.  Month-to-date, day-ahead settlement price, in West Hub, are averaging $45.05/MWh or are -9% lower than February’s average last month.
  • PJM’s Reliability Resource Initiative Draws 26.6 GW with 94 Applications - On 3/21, PJM announced that its Reliability Resource Initiative (RRI), a one-time opportunity for up to 50 qualifying projects to insert into an earlier stage of the interconnection queue (Transition Cycle #2), received 94 applications totaling 26.6 GW of installed capacity.  The applications are comprised of 47 uprates to existing resources and 47 new generation projects including nuclear, natural gas, and battery storage resources.  PJM is currently validating the applications and anticipates announcing selected projects in May 2025.

Great Lakes Electric Summary

  • The Great Lakes Region’s forward power prices were up slightly on the week with more support on the outer terms than the near terms.  After selling-off early last week, natural gas prices moved back up over $4.00/MMBtu amid the April contract expiry, colder weather forecasts than previously expected and record LNG exports.  The weather forecasts picked up demand gains over the weekend as the pattern became more amplified.  This brings unseasonable warmth to much of the eastern half of the nation this week with cooler air in the West.  The signals switch next week with blocking (ridging) combining with chilly air coming down from the northern latitudes into the eastern half of the nation.  Future power prices for the 2026 term were flat over the past week but were 1% higher for the 2027-2030 terms.  Month-to-date, day-ahead settlement prices for COMED are averaging $25.46/MWh or -35% lower than February’s average last month, while those same index averages in AdHub are $40.32/MWh or -14% lower than last month.  In Michigan, the month-to-date average price is  $37.27/MWh or -22% lower than February’s average, while those prices in Ameren are averaging $30.86/MWh or -31% lower, month-over-month.
  • 2026/27 Reserve Margin and Forecast Pool Requirement - On 3/19, PJM Members endorsed the Installed Reserve Margin (IRM) and Forecast Pool Requirement (FPR) for the 2026/2027 Base Residual Auction (BRA).  Compared to the 2025/26 3rd Incremental Auction (IA), the IRM for 2026/27 BRA increased from 17.8% to 19.1% with a corresponding FPR decrease from 0.9380 to 0.9170.  The changes are driven largely by the increased share of reliability risk in the winter due to the higher 2025 load forecast and changes in the resource mix.  PJM will use these values for the 2026/27 BRA auction scheduled for July 2025 and will post the full planning parameters on 3/31, although posting of the Variable Resource Requirement (VRR) is likely to be delayed.  The VRR curve is a downward sloping demand curve that relates the maximum price for a given level of capacity resource commitment relative to reliability requirements.  PJM previously requested that FERC approve a 28-day delay for posting the demand curve to give time for FERC to act on the proposed cap/floor settlement of the Shapiro complaint.  PJM has asked FERC to act by 3/28 on the request for a delay in posting the VRR curve.

Northeast Energy Summary

  • On March 11 & 12, the New England Power Pool Markets Committee discussed Capacity Auction Reform (CAR) and ISO-NE provided stakeholders with a number of updates to its design for a prompt market.  First, ISO-NE explained how retirements would be treated.  All deactivations (formerly delist bids) greater than 20 MW will be reviewed for reliability in a process similar to what is done today, with a focus on transmission security and market monitor review for market power.  Despite stakeholder pushback, ISO-NE continues to maintain that, once submitted, a deactivation request cannot be withdrawn.  In addition, ISO-NE introduced its Prompt Auction design which will be a sealed bid auction taking place 1-2 months prior to the start of each commitment period (CP).  ISO-NE then reviewed an assessment of expected bidding behavior in a prompt auction, explaining that it believes there will be little difference in prompt auction prices from the current forward market because clearing prices will largely be set based on expected revenue needs of either new entrants or existing units that must make incremental investments and not costs incurred between the auction and start of a delivery year.  These assertions were met with stakeholder cynicism and a view that prices will depend more on what can and cannot be included in offers.  Finally, ISO-NE provided a short preview of its latest thinking on seasonal auctions.  They are settling on two, equal 6-month seasons (summer and winter) to best align with fuel availability and compatibility with NYISO.
  • Governor Hochul has nominated Amanda Lefton to become the new commissioner of the Department of Environmental Conservation (DEC).  If confirmed by the New York State Senate, Lefton would replace Sean Mahar who has served as the Interim Commissioner following Basil Seggos’ departure last April.  Most recently, Lefton worked as RWE’s Vice President of Offshore Development-U.S. East, and as Senior Policy Director at Foley Hoag LLP.  Lefton previously served as the Director of the Bureau of Ocean Energy Management (BOEM) within the United States Department of the Interior during the Biden Administration.  Prior to her role at BOEM, Ms. Lefton served as the First Assistant Secretary for Energy and Environment in the Office of Governor Andrew Cuomo.

ERCOT Energy Summary

CAISO, Desert Southwest and Pacific Northwest Energy Summary

  • We’re in that time of year where temperatures don’t matter until they do. When you look at the temperature board for a region and the color palette falls between Prussian Blue and Burnt Sienna, there’s little to be expected in the way of demand. But variability on both ends of the spectrum is also possible this time of year and because of that we’re going to near both ends of that color spectrum over the next couple of weeks. We have a cooler week in front of us today (4/1), including some winter like cold (Prussian Blue end of the spectrum) across portions of the interior West, Rockies, and Western Canada. Storminess will also be seen early this week stretching from California up into the Pacific Northwest with minor mountain snow accumulations. Ridging is then shown to build in and things get warmer this weekend into the second week of April with milder temps forecast to dominate and even suggesting summer like heat returns (Burnt Sienna) to parts of SoCal and the DSW cities towards the end of next week with daytime highs potentially clipping the 90o mark in Phoenix and the interior LA Basin.
  • Balancing the gas grid is becoming as much of a challenge as the power grid of late. This is sending a strong downward price signal in the bilateral market given the lack of heating and power generation demand as the renewable output across wind, solar and hydro is quite impressive and this without much in the way of snowmelt from the higher elevations. We expect High operational flow orders (OFOs) to be in play from this point forward. Prices at both city gate hubs for April are right around $3.05 MMBtu which is screaming to be purchased and stored so it can be delivered in Q3 when prices are closer to $4.50 at PG&E and nearing $5.00 at SoCal. We are also crossing into maintenance season across several regions so natural gas balancing gets extra tricky as throughput and flow direction has to work around constraints.
  • Dispatchers on the BPA system up north are in a bit of a pickle as March saw a lot of snow land in the mountains and the reservoir operators need to make room for that water via the Flood Control curves that are used to manage the system. This translates to the need for major dams along the Columbia like Grand Coulee and others needing to release water before the end of April; roughly 23 feet of elevation needs to come out of Grand Coulee in less than 30 days. The creates a very bearish situation as that water will move through the turbines producing beaucoup megawatts at a time when the grid really doesn’t need them, and the only relief will come from limitations on flow provided by fish management operations. The Pacific Northwest will be swimming in electrons and eventually some will make their way into California along the Pacific AC and DC interties at the same time in-state hydro will come into play and output from the solar fields across SP15 will rip higher. The CAISO grid has been dealing with negative prices throughout March as both the day ahead and real time markets have been feeling very heavy from the surplus of supply. Saturday was the perfect example of what’s to come in April as both NP15 and SP15 delivered peak period settlements in the day ahead in the -$10 to -$12 range with the peak hour crashing to -$40 MWh. One has to look back to March 14th to find a day where at least some midday hours did not clear below the $0 waterline in the day ahead. Index buyers should rejoice.

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