Monthly Natural Gas Market Report | February 2025

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Another triple-digit withdrawal and temps falling next week – slightly b u l l i s h

WEEKLY NYMEX FWD CURVE CHANGES – FEBRUARY IS OUR PROMPT MONTH

NYMEX

Falling temps and rising LNG feedstock demand are driving prices with serious upward pressure, as analysts also anticipate strong demand for storage injections in less than seven weeks. MAR25 gained 31￠ on the week and settled at 3.565 while gaining in electronic trading and rising to 3.68. Next week’s temps show bitter cold every night and can put more upward pressure on prices.

STORAGE

Working gas decreased to 2,297 Bcf as of February 7th, with a withdrawal of 100 bcf, or 74 bcf LESS than last week, which was expected. Storage is 67 Bcf below the 5-year average, gaining 44 bcf - bearish. There are adequate supplies for the balance of Winter, yet withdrawals are expected to climb the next two weeks.

ONE WEEK CHANGE – NYMEX and OIL

WEATHER

Feb 13-19: Very cold systems will sweep across most of the interior US w/rain, snow, and highs of 0s to 40s, lows of -10s to 30s for strong national demand. The warmer exception will be the far southern US w/highs of 50s to 70s. Overall, HIGH national demand the next 7-days.

Electric Outlook

• The On-Peak Strip began this year (baseline) at $45.68/MWh (Trading Year: 2026), $51.35/MWh (Trading Year: 2027), and $54.62/MWh (Trading Year: 2027).
• Since the beginning of last year (2024), the trading year 2025 has decreased $8.82 (16.18%), the trading year 2026 has decreased $5.89 (10.29%), and the trading year 2027 has decreased $2.80 (4.88%).

PJM CAPACITY AUCTION FOR 2025/26 RESULTS PRICES SPIKE

On July 17th, 2024, PJM held its Capacity Auction for Planning Year 2025/26. The results were published on July 30, 2024, and the rates are significantly higher than the previous year. Rates increased by 816% for most of PJM’s footprint. The majority of PJM’s current Capacity rate is $29.50 per MW-year for 24/25 and the rate increased to $270.35 per MW-year for 25/26. The PJM Planning year runs from June 1st to May 31st.

The increase in rates was a result of:

1. increased projected load growth in PJM
2. decreased supply offers into the auction due to generator retirements of power plants
3. FERC-approved market reforms to risk modeling for reserve margins.

PJM CEO Manu Ashthana stated “The significantly higher prices in this auction confirm our supply/demand balance is tightening across the RTO. The market is sending a price signal that should incent investment in resources.” In the past year alone, supply declined by 6.6 GW of generation retiring or given notice of intent to deactivate. With supply declining, demand has been increasing and is projected to increase more in the next few years due to new data centers being built across PJM’s footprint.

What does this mean for customers come June 2025? For an 80% Load Factor customer, the increase in Capacity rates represents about a $0.012 per kWh increase in cost. This translates into about $12,000 annually for a customer that uses 1,000,000 kWh per year.

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Ohio Certificates- Natural Gas: 14-343G(3) Electric: 14-780E(3)

Pennsylvania Certificates- Natural Gas: A-2016-2562535 Electric: A-2009-2108640