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Weekly Energy Industry Summary

Commodity Fundamentals

Week of March 3, 2025

By The Numbers:

  • NG '25 prompt-month NYMEX settled at $4.12 per MMbtu, up $.29/MMbtu, on Monday, March 3.
  • WTI '25 prompt-month crude oil settled at $68.37 per barrel, down $1.39 per barrel on Monday, March 3.

Natural Gas Fundamentals - Bullish

  • Prompt-month NYMEX natural gas settled at $4.12 per MMbtu, up $.29/MMbtu on Monday, March 3.
  • A chilly spring is on the menu for now --  "cooler for longer" is a strong plank of near-term support for natural gas.
  • After several days of softening prices last week, prices are surging as the weather outlook turned more bullish on Monday.
  • Natural gas demand for 2025 (year-to-date) averaged 140 Bcf per day, up 9% over the same period last year.
  • Natural gas production for 2025 (year-to-date) averaged 104 Bcf per day versus 103 Bcf per day over the same period last year.
  • The difference between production in 2025 and last year will begin to widen, favoring 2025 to the upside, as producers began to curtail production in March of last year in response to collapsing prices, and will not do so this year.
  • Electric power generation demand for gas, year-to-date, averaged 35.7 Bcf per day versus 34.1 Bcf per day for the same period last year.
  • Residential/commercial demand for gas year-to-date averaged 46.6 Bcf per day versus 39.6 Bcf per day for the same period last year.
  • LNG exports month-to-date averaged 15 Bcf per day versus 13.8 Bcf per day for the same period last year.
  • Overall demand for natural gas is elevated over the same period last year.  Storage is materially lower than the same period last year.  Production is slightly higher than the same period last year.

Crude Oil - Neutral/Bearish

  • NYMEX (WTI) prompt-month crude settled at $68.37/bbl, down $1.39/bbl on Monday, March 3.
  • OPEC decided on Monday to proceed with a planned April output increase of 138,000 barrels per day, the group's first since 2022.
  • U.S. tariffs on energy imports from Canada and Mexico (10% on energy and 25% on other imports) took effect today.  Canada and Mexico account for more than 70% of all U.S. imports of crude oil.
  • The basis differential for Canadian crude oil hit -$14 per barrel potentially offsetting some of the upward price impact of the tariff.
  • Trump tariffs have sparked concerns over economic growth in the U.S. and the potential for softening domestic demand for crude oil.
  • OPEC spare production capacity of 6 million barrels per day is hanging over the market as well offering more downward pressure on pricing.

Economy - Neutral

  • The Trump Administration's tariffs on Canadian and Mexican goods took effect today with a 25% levy.  For Canada, a lower tariff of 10% applies to crude oil.
  • The U.S. also introduced an additional 10% tariff on China, boosting such to 20%.
  • Canada, Mexico and China have either retaliated or are in the process of retaliating.
  • The equities markets have not taken the tariff news well as the broader U.S. indices dropped more than one percent.
  • The DOW, S&P and NASDAQ are all down and additional 1.7% this morning.
  • The Province of Ontario announced a 25% export tariff on sales of electric power to the U.S.

Weather - Bullish

  • Colder for longer.
  • Cooler changes came into view early this week.
  • A back-and-forth pattern features a few warm days in the East and Midcon, followed by a few cold days.  
  • A warm-up is expected later next week, but the 11-15 day has moved cooler during the past 48 hours.
  • A chilly spring is in the air.

Weekly Natural Gas Report:

 
  • Inventories of natural gas in underground storage for the week ending February 21, 2025 are 1,840 Bcf; a withdrawal of 261 Bcf was reported for the week ending February 21, 2025.
  • Gas inventories are 238 Bcf below the five-year average and 561 Bcf less than the same time last year. 
Values reflect week ending Feb. 28, 2025
Prices reflect week ending Feb. 28, 2025

Weekly Power Report:

Mid-Atlantic Electric Summary

  • The Mid-Atlantic Region’s forward power prices were slightly lower over the past week but will likely see some price-support this week as natural gas prices moved higher on Monday with colder changes to the weather model, as well as reports of record high send-outs of Liquid Natural Gas (LNG) driven by storage deficits of the commodity in Europe.  Natural gas prices faltered last Friday with fading weather demand and strong production, but those prices reversed course on Monday with the changing temperature outlooks.  We saw some heating demand gains, early this week, as storms in the pattern are expected to offer cooler/chillier days as they move across the eastern half of the nation. With a lack of arctic air, these changes bring chilly nights and cooler days, but not as intense as what we have seen this past winter.  Future power prices for the 2025-2029 were -1% lower, week-over-week.  Over the past month, the 2025/26 terms were 7% higher on average while the 2028/29 terms were -4% lower.  Day-Ahead settlement prices thus far in March, in West Hub, are averaging $48.79/MWh.  Final February settlement averages have not been released as of yet.
  • PJM Board Approves ~$6 Billion in 2024 Transmission Plan - On 2/26, the PJM Board of Managers approved ~$6 billion in new transmission projects for the 2024 Regional Transmission Expansion Plan (RTEP) including several new 500 and 765 kV lines.  The selected projects address accelerated load growth, generation mix changes and shifts in power flows largely driven by data centers and electrification.  The Board also approved an increase of $775 million for projects associated with the Brandon Shores deactivation, bringing total costs to $1.5 billion, due to increased equipment costs, design changes, and construction complexities.

Great Lakes Electric Summary

  • The Great Lakes Region’s forward power prices saw little movement over the past week but will likely see some price-support this week as natural gas prices moved higher on Monday with colder changes to the weather model, as well as reports of record high send-outs of Liquid Natural Gas (LNG) driven by storage deficits of the commodity in Europe.  Natural gas prices faltered last Friday with fading weather demand and strong production, but those prices reversed course on Monday with the changing temperature outlooks.  We saw some heating demand gains, early this week, as storms in the pattern are expected to offer cooler/chillier days as they move across the eastern half of the nation.  With a lack of arctic air, these changes bring chilly nights and cooler days, but not as intense as what we have seen this past winter.  Future power prices for the 2025-2029 were relatively unchanged week-over-week.  Over the past month, the 2025/26 terms were 8% higher on average while the 2028/29 terms were -3% lower.  Day-Ahead settlement prices in AdHub thus far for March are averaging $47.08/MWh while those price in COMED are averaging $28.12/MWh.  In Michigan the settlement average for this month is $41.93/MWh, while in Ameren they are clearing at $35.79/MWh on average thus far.  Final February settlement averages have not been released as of yet.
  • FERC Approves Changes to Capacity Market Rules - On 2/14, FERC accepted several changes to PJM’s capacity market design related to treatment of reliability-must-run (RMR) resources as price takers in the market clearing process (i.e., as if the resources offered into the capacity market at $0) and use of a combustion turbine as the Reliability Pricing Model’s (RPM) reference resource.  Reference resources are a key component used to shape the capacity market’s demand curve (i.e., Variable Resource Requirement Curve).  While this reform will put downward pressure on capacity prices, it will help ensure appropriate financial incentives for capacity resources to perform when called upon during system.

Northeast Energy Summary

  • ISO-NE made a FERC filing on Friday February 28 with ISO-NE tariff changes to allow ISO-NE to charge importers for any import duties on Canadian power imports.  ISO-NE laid out a multi-pronged response to the Trump Administration’s February 1 Executive Order (paused until March 4) imposing an import tariff or duty on Canadian imports. First, ISO-NE will argue that the import tariffs should not apply to electricity.  Together with other RTOs/ISOs, ISO-NE developed a “compelling” argument that electricity imports are “intangible” and thus exempt from import duties. Should the Administration nevertheless impose the import tariffs, ISO-NE will argue that RTOs/ISOs are not the entity responsible for paying the duties.  At the February 6 Participants Committee meeting, ISO-NE noted it would work with FERC to provide NERC e-Tag transaction data to U.S. Customs so U.S. Customs can then apply the levy on the entity that is importing power as noted in the transaction’s e-Tag. Should the Administration determine that RTOs/ISOs are responsible for collecting and/or paying the import duties, ISO-NE’s FERC filing will seek the authority for ISO-NE to pass-through and charge the import duties to market participants importing the power.  To be made under the “Exigent Circumstances” provisions of the ISO-NE/NEPOOL Participants Agreement, the upcoming FERC filing will propose a temporary mechanism to allocate the duties to the participants importing the electricity into the New England market.  ISO-NE proposed to file at FERC a final cost allocation mechanism 120 days after ISO-NE issues the first invoice for the duties.  During this 120-day period, ISO-NE will work with the New England states and stakeholders to develop a replacement cost collection mechanism. Depending on whether the import duty is 10% or 25% (one of many issues needing clarification in the Executive Order), ISO-NE estimated an annual cost of $66 million to $165 million (or approximately $0.55 – 1.45/MWh on a unitized basis).
  • On 2/25, NYISO presented to stakeholders two proposals it plans to file with FERC giving itself the means to collect duties under federal tariffs on energy imports if applied to electricity.  President Trump announced a 10% tariff on “energy resources from Canada” but paused that action on 3/3.  Although NYISO questions the legality of applying the tariff to electricity, and whether it would be NYISO’s role to collect any duties, NYISO wants to ensure that it is prepared on 3/4, when the tariff is currently scheduled to go into effect, consistent with a statement from the NYISO Board directing any necessary NYISO tariff modifications to comply.  NYISO’s primary proposal would allow it to collect duties on real-time scheduled imports originating from “Duty Eligible Proxy” buses that represent interties between New York and Canada.  It would create a new Rate Schedule 21 for duty recovery that would be paid to a relevant federal authority and charged to the “financially responsible party” for each subject transaction.  Under this proposal, NYISO would use day-ahead location-based marginal prices to calculate duties.  NYISO indicated using this method will allow both day-ahead and real-time transactions to reflect the cost of duties in their offers. Using real-time prices would make it impossible for duties to be calculated on day-ahead transactions.  The process of calculating, collecting and paying duties would be manual until NYISO can develop software to automate each step.  NYISO would not collect duties on Canadian energy wheeling in from other control areas.  NYISO’s alternate proposal defines subject transactions the same way but would collect the required duties from withdrawals on a ratio-share basis.  NYISO stated that applying duties to load would maximize the likelihood that NYISO has the legal authority to collect in the event its first approach is not accepted.

ERCOT Energy Summary

CAISO, Desert Southwest and Pacific Northwest Energy Summary

  • Returning to the desk on Monday and a whole new month found the weather pattern in a completely different place relative to one week earlier. Model runs trended in the colder direction over the weekend across much of the Western U.S. as well as Western Canada bringing a cooler than normal and stormy outlook for the next couple of weeks. With no real cold air connection, temperatures don't look all that extreme, but cooler than normal will be the theme throughout the first half of March especially across California and the Southwest. Storminess returns to the Central Valley and SoCal beginning tomorrow with several other systems likely to bring notable snowfall to the Sierras and heavy rains to coastal population centers over the next week. This will improve an already improved situation in terms of the spring runoff situation, California’s snowpack rose from 69% of normal on February 1 to 85% of normal on February 28, while Oregon rose from 113% to 127% and Washington from 87% to 92%.
  • After a weekend that saw cash gas prices pushed lower by spring weather demand, prices rebounded on Monday trade for flow today and over the balance of the month of March. The incentive is already there for traders to stuff molecules into storage in a storage situation that still needs to take molecules out of storage. In SoCalGas territory cash prices cleared ~$3.77 per MMBtu for flow today while Q3 prices are closer to $5.20 MMBtu. Since California is the only region carrying some blue coloration into the near-term model runs city gate prices moved higher on the expectation power burns will take off across all three gas regions (PG&E, Kern, SoCalGas) and some sympathy for the larger move in Henry Hub prices on the dual threats of 10% energy tariffs on Canadian gas imports beginning today (3/4) and consistent European demand for LNG exports.
  • Dispatchers at the CAISO have consistently been producing less of the state’s electricity via thermal generation as in-state solar and battery generation have increased in recent years. Each year has seen a notable increase in renewable energy curtailments and negative prices, beginning earlier each year, especially during the midday hours. In a good water year, imported energy adds to the pressure on in-state thermal generation. The problem is most acute in SP15 where most of the state’s solar generation is located and suffers under the lack of transmission to export all of the surplus energy in times of high solar irradiance but low net CAISO loads. Over the past 30 days, only three have not seen midday prices crash below the $0 per MWh floor in the late morning to early afternoon period. Index buyers would do well to maximize usage when the grid is paying consumers to consume.
  • In the aftermath of the LA Fires in January, an event that is slowly evolving to become the most expensive disaster in U.S. history, California state lawmakers are allocating their time towards the highest priorities. A bill was introduced into the State Assembly recently that would name an official state cryptid. A what? We strive to provide good reliable information in the eMarket Update each week, so we looked it up. Cryptids are creatures with dubious evidence for their existence, think the “Chupacabra”, also known as the “goat-sucker” of the American Southwest, or “Nessie”, the Loch Ness Monster of Scotland, or even her lesser known cousin, “Tessie”, of purported Lake Tahoe origin. Like every other state, California has a state song (“I Love You, California”), a state flower (the poppy), and a state tree (California redwood). Now, AB666 seeks to make California the first state to adopt an official state cryptid by officially designating Bigfoot, also known as Sasquatch, to this place. Could it pass and wind up on the Governor’s desk? There is precedence for this kind of inanity. In 1991, California was the first state to designate an official prehistoric artifact. Called “Chipped Stone Bear" and is the Official California State Prehistoric Artifact, as adopted by the California Legislature on June 24, 1991, and signed into law (Senate Bill 404, Chapter 73, 1991 in case you were wondering.) Q: has Bigfoot even been sighted in California? A: 463 times. Across the broader west region, according to the Bigfoot Field Research Organization since 1990 (these are considered only the most credible sightings): Washington: 724; California: 463; Oregon: 261; Nevada: 9; New Mexico: 44. Nope, we’re not making this up.

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