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Weekly Energy Industry Summary

Commodity Fundamentals

Week of May 5, 2025

By The Numbers:

  • NG '25 prompt-month NYMEX settled at $3.55 per MMbtu, down $.08/MMbtu, on Monday, May 5.
  • WTI '25 prompt-month crude oil settled at $57.13 per barrel, down $1.16 per barrel on Monday, May 5.

Natural Gas Fundamentals - Neutral

  • Prompt NYMEX natural gas settled at $3.55per MMbtu, down $.08/MMbtu on Monday, May 5.
  • After weeks of hard selling, natural gas staged a short covering rally over the past several trading days and further support came into the market with a weaker-than-expected storage injection.
  • Production year-over-year is up, averaging 104.1 Bcf per day versus 100.8 Bcf per day for the same period last year.  Production, however, seems to be tapering between 104 and 105 Bcf per day. Tapering production is a supportive signal.  
  • While production is up year-over year, so is demand.  Residential/commercial demand for natural gas year-to-date averaged 34.4 Bcf per day versus 23 Bcf per day for the same period last year. 
  • Gas demand for power generation averaged 32 Bcf per day, year-to-date, versus 29.8 Bcf per day for the same period last year.
  • LNG exports averaged 15.5 Bcf per day year-to-date versus 12.6 Bcf per day for the same period last year.
  • Exports to Mexico averaged 6.2 Bcf per day year-to-date versus 5.9 Bcf per day for the same period last year.
  • Near term weather looks neutral as rain in Texas and parts of the Southwest will keep temperatures in check, while it is relatively cool in the Midwest and n\Northern tier.
  • Falling crude oil prices begin to be supportive of natural gas in the mid-term as lower crude prices reduce the appetite for increases to associated gas production.

Crude Oil - Bearish

  • NYMEX (WTI) prompt-month crude settled at $57.13/bbl, down $1.16 per barrel.
  • Demand outlooks are bearish.
  • Oil ends session yesterday at a 4 year low as OPEC accelerates production hikes.
  • OPEC says it will hike production 411,000 barrels per day in June
  • OPEC is eyes full unwinding of voluntary production cuts by October, Reuters reports.
  • Last week WTI dropped 7.5%.
  • Brent crude fell 8.3% last week.
  • The Saudi's are reportedly upset with OPEC members (Kazakhstan and Iraq in particular) for violating production quotas.
  • As crude moves toward $50 per barrel, U.S. oil and gas producers will begin to feel the squeeze and cut back on production and investment -- low crude oil prices are bullish of natural gas, all other things being equal.

Economy - Neutral

  • U.S. GDP contracted 0.3 percent in the first quarter.
  • Employers added 177,000 new jobs in April despite tariff uncertainty.
  • U.S. hiring slows as employers' concerns mount, ADP data show.
  • U.S. initial jobless claims climbed last week but remained close to recent levels, The Labor Department reported.
  • Home sales in March fell 5.9% -- the biggest drop since 2022.
  • Commodity prices are under pressure globally.
  • Republican Congressional leaders are saying that the "Big Beautiful Bill" can be passed by July 4 extending the Trump tax cuts from his first term.
  • The Administration is in trade negotiations with dozens of countries.
  • China reduced or eliminated its tariffs on numerous U.S. imports.

Weather - Neutral

  • May is here.
  • Much needed rain will appear in Texas and some of the Southwest keeping temperatures in check.
  • Seasonally cool air will give way to normal temperatures in the Midwest.
  • The weather looks very neutral this week.

Weekly Natural Gas Report:

 
  • Inventories of natural gas in underground storage for the week ending April 25, 2025 are 2,041 Bcf; an injection of 107 Bcf was reported for the week ending April 25, 2025.
  • Gas inventories are 5 Bcf above the five-year average and 435 Bcf less than the same time last year. 
Values reflect week ending May 2, 2025
Prices reflect week ending May 2, 2025

Weekly Power Report:

Mid-Atlantic Electric Summary

  • The Mid-Atlantic Region’s forward power prices were higher this past week, being supported by natural gas prices amid bullish technical momentum and a supportive inventory report.  The June natural gas futures contract charged higher on Friday, marking the first week of prompt-month gains since March 28.  The market has rallied with no real impetus from demand.  A storm-induced cooler-than-normal pattern across the southern tier and up the East Coast for about another week will bring a low demand pattern with warm anomalies in the North and cooler anomalies in the South. The pattern begins to shift next week with less rain and more warmth.  Power price futures for the 2026-2030 terms were 4% higher over the past week on average, but -1% lower over the past month.  The final, day-ahead settlement price in West Hub for the month of April is $45.97/MWh, which is 2% higher than March’s average final settlement price last month and 63% higher than April 2024.
  • PJM Speeding Progress on Interconnection Queue - On 5/2 PJM announced the projects selected for the Reliability Resource Initiative (RRI), a one-time insertion of qualifying projects into a 14-month earlier phase of the interconnection queue. The 51 projects selected total 9,361 MW which equates to 7,253 MW of Unforced Capacity (UCAP).  PJM also announced on 4/18 the completion of the interconnection process for Fast Lane projects. within Transition Cycle 1.  Fast Lane projects were eligible for accelerated processing under PJM’s legacy serial study process if their estimated Network Upgrade allocation was less than $5 million.  Approximately 25.2 GW of projects were identified as Fast Lane and PJM completed the interconnection studies in December 2024.  Roughly 19 GW of Fast Lane projects have signed GIAs and are now eligible to proceed to construction.  Closure of the Fast Lane was a prerequisite to officially initiate Phase 3 of the cycle study for Transition Cycle 1, which kicked off on 4/21.

Great Lakes Electric Summary

  • The Great Lakes Region’s forward power prices were higher this past week, being supported by natural gas prices amid bullish technical momentum and a supportive inventory report.  The June natural gas futures contract charged higher on Friday, marking the first week of prompt-month gains since March 28.  The market has rallied with no real impetus from demand.  A storm-induced cooler-than-normal pattern across the southern tier and up the East Coast for about another week will bring a low demand pattern with warm anomalies in the North and cooler anomalies in the South. The pattern begins to shift next week with less rain and more warmth.  Power price futures for the 2026-2030 terms were 4% higher over the past week, on average, but relatively unchanged over the past month.  The final, day-ahead settlement price average in COMED for the month of April was $23.62/MWh or-7% lower than March’s final average, while those final prices in AdHub were $45.53/MWh or 13% higher than last month.  In Michigan, the final, day ahead average settlement price was $36.85/MWh or -1%% lower than March’s average, while that price in Ameren was $29.33/MWh or is -5% lower, month-over-month.
  • MISO Announces 2025/26 Capacity Auction Results - On 4/28, MISO posted the results of its 2025/26 Planned Resource Auction (PRA).  MISO’s auction produces seasonal results, and this was MISO’s first auction implementing its new sloped demand curve for capacity, known as the Reliability Based Demand Curve (RBDC).  Overall, MISO had a slight surplus across the system in all seasons although surplus capacity in the summer has reduced from approximately 6.5 GW in 2023, to 4.6 GW in 2024, to 2.6 GW in 2025.  No individual zones separated in price due to local clearing requirements.  Prices were as follows: $666.50/MW-D systemwide for summer, $91.60/MW-D in the North and Central regions for fall, $74.09/MW-D in the South region for fall, $33.20/MW-D systemwide in the winter, and $ 69.88/MW-D systemwide in the spring.  The price separation in fall reflects binding contractual transmission constraints between north and south during that season.  While the summer season prices appear high relative to recent previous MISO auctions, where summer prices cleared as low as $10/MW-D for 23/24 and $30/MW-D for 24/25, the results are consistent with MISO’s intent to send better price signals through the new sloped demand curve.  The RBDC resulted in MISO procuring higher quantities, and therefore, higher reserve margins at what the administratively-determined curve deemed to be economical prices.  MISO held a call on 4/29 to discuss the results and emphasized that most load (approximately 92%) was hedged with corresponding supply.

Northeast Energy Summary

  • On April 22, the Maine Energy, Utilities and Technology (EUT) Committee held a work session on two bills related to utility-owned generation: a bill (LD1358) that would remove prohibitions on electric distribution companies (EDCs) owning affiliated generation; and a bill (LD1592) that would allow the EDCs to own generation directly.  The Office of the Public Advocate offered an amendment to the affiliated generation bill that would allow EDC affiliates to participate in competitive RFPs subject to PUC approval. The committee discussion focused mainly on the ability of Avangrid, CMP’s parent, to participate in offshore wind procurement solicitations for projects potentially connecting to CMP, the largest EDC in the state.  A majority of the committee felt the utility-owned generation bill went too far and would be anti-competitive, resulting in a 9-4 party line vote rejecting the measure.
  • The Northeast will continue to see rainfall and thunderstorm activity for a few more days before the low pressure system moves off the East Coast.  A warmer pattern is expected to develop in the 11-15 day period.  Forward power prices in New York moved higher last week, with Bal ’25 and Cal ’26 strips moving up ~4-5% across all power zones before retreating to kick off this week, as traders gave more weight to weak near-term weather demand versus looming summer heat, when New York power and gas prices typically peak due to increased cooling demand.  Last week, the NYISO posted a statement regarding its intent to include the ICAP Ineligible Forced Outage (IIFO) of Narrows Gas Turbine Facility in the Q2  2025 Short-Term Assessment of Reliability (STAR) report.  This follows the NYISOs Q1 STAR report confirming deficiencies in NYC under peak or high demand conditions that would require the temporary need to retain several peaking units subject to the DECs “Peaker Rule” on the Gowanus 2 and 3 and Narrows 1 and 2 barges until the expected commercial operation of Champlain Hudson Power Express (CHPE), currently slated for May 2026.

ERCOT Energy Summary

CAISO, Desert Southwest and Pacific Northwest Energy Summary

  • Changes over the weekend to the near-term forecast were mostly to the cooler side, as an active Pacific flow continues to keep a marine layer in the picture thus keeping temperatures in check for the West region. We are still expecting a seasonal warming trend later this week, seeing Sacramento looking at highs in the mid-80’s by Weds while Burbank is ten degrees cooler with highs in the mid-70s. A more significant cooler than normal period is expected next week throughout much of the West. The forecast suggests increased heating demand in the Northwest and Rockies early next week while greatly reducing cooling demand in the DSW cities. A deep upper-level trough that looks to progress into the West will bring unseasonably cool conditions; highs are expected to retreat to the mid to upper 70s in Phoenix and upper 60s to low 70s in Las Vegas on Sun-Mon. The forecasted high of 67° in Las Vegas on May 4th would tie the daily record cool high, while the forecast of 76° in Phoenix on May 5th is not near records but well below the normal high of 91°. Highs in California will mostly be in the 60s and 70s with lows in the 50s. Snow melt will only gradually increase heading into May as temperatures are looking slow to warm, keeping the water on the mountains for now.
  • The annual low load period means SoCalGas continues to see a surplus of molecules on their system and pipeline maintenance along with maintenance at the Aliso Canyon storage is limiting their ability to move them around. High operational flow orders (OFOs) alerts have become a nearly daily part of the natural gas landscape in the region … we think we’re up to 10 consecutive days but admit to having lost count at this point. Today through May 15th, maintenance outages will limit total SoCal injection capacity to 0.224 Bcf/d meaning chances are the OFO streak continues given the mild weather outlook. PG&E storage is trending ahead of last year showing 139.8 Bcf as of Monday’s report, while SoCal is at 81.3 Bcf which is roughly 19 Bcf behind where they were at the end of April last year. Maintenance at the T-South compressor in British Columbia produced some remarkable index settlements last week, bringing West Texas style prices to the Pacific Northwest. A $9 gap opened between Westcoast Station 2 and the Sumas hub as the former settled at -$8.04 while the latter shifted up to +$1.10. This is one of the lowest prices seen at this Canadian trading hub but exemplifies what happens when pipeline capacity gets pinched.
  • Low demand on the CAISO system and high renewables from the trifecta of solar production flying out of the state’s deserts, the seasonal pickup in wind output and the building hydro gen megawatts is aggravating the S to N congestion on display in the day-ahead index market and worsens in the real-time where NP15 prices settle in positive territory but SP15 prices clear well into negative territory posting numbers routinely in the teens and $20 per MWh below zero. This has been a great environment for batteries as the prices quickly move back above zero when the sun fades. Max discharges on the system have been growing as operators try to capture these economics, the largest to date has been 9.7 GW during the 20th hour on April 21st, a number that in all likelihood would have broken 10 GW if Moss Landing did not have its thermal issue back in January.
  • We heard California’s governor last week boast that the state overtook Japan in 2024 to become the world’s fourth-largest economy. The hold on that rank is fragile as the state is losing jobs – 54,800 during the first three months of this year – and potentially more to come as Valero notified the California Energy Commission (CEC) of their intention to “to idle, restructure, or cease refining operations at the Benicia Refinery by the end of April 2026”, citing the state’s challenging regulatory environment as a driving factor. The refinery is the sixth largest in California and has been under Valero’s names since 2000, processing 149,000 barrels per day and accounting for roughly 9% of the state’s crude oil capacity. Valero is also evaluating options for its Wilmington facility in Los Angeles County, which produces 93,500 barrels per day. The announcement comes six months after Phillips 66 announced its decision to close its Los Angeles refinery at the end of 2025, and two weeks after Chevron announced plans to lay off 600 employees as it relocates its HQ from San Ramon to Texas. Chevron’s move was seen as a response to California’s stringent regulatory and environmental policies, which, combined with the state's reliance on imports and lack of pipelines, have contributed to volatile gas prices in the state. Chevron urged the state legislature and the governor to reconsider various regulations, including the ban on new gas-powered cars by 2035, a recent law limiting oil refiners’ profit margins, and new regulations regarding oil supply and maintenance. Valero’s potential refinery closure could exacerbate that volatility. The state has stricter environmental standards for its gasoline, requiring a squeaky-clean blend known as California Reformulated Gasoline, which reduces pollutant emissions but is more expensive to refine, driving the state’s higher gas prices. California relies on nine refineries to produce its special gasoline blend, with production barely meeting current fuel consumption. The potential closure of Valero’s Benicia facility, along with Phillips 66’s planned closure, would reduce California's refining capacity by 18% within a year. The closure would also impact carbon dioxide supply in a state that is already at risk of a potential CO2 shortage. The Phillips 66 refinery supplies around 500 tons per day and with the potential Valero closure, California could lose one-fifth of its carbon dioxide production by mid-2026. According to the CEC’s website, only 10 refineries currently produce diesel or gasoline for the state.
    • Marathon Petroleum, Los Angeles Refinery 365,000 barrels per day (bpd)
    • Chevron, El Segundo Refinery 269,000
    • Chevron, Richmond Refinery 245,271
    • PBF Energy, Torrance 160,000
    • PBF Energy, Martinez 156,400
    • Valero Energy (Benicia), Wilmington 145,000
    • Phillips 66, Los Angeles 139,000
    • Valero Energy, Wilmington 85,000
    • Kern Energy, Bakersfield 26,000
    • San Joaquin Refining, Bakersfield 15,000

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