April Energy Market Update

Article by Constellation

Unlock the power of informed energy decisions with Constellation, your source for understanding all the factors that influence the energy market. Constellation’s Commodities Management Group provides key insights into weather, economic trends, natural gas dynamics and purchasing fundamentals important to your energy procurement strategy. With these insights, your business can confidently navigate the complexities of the energy market.

Weather Report

The short-term weather outlook predicts that temperatures in the East will be above normal to well above normal. This will result in minimal demand from the Midwest across the Great Lakes and into the Northeast. However, higher temperatures in the Ohio Valley, Mid-Atlantic and South will lead to some above normal cooling demand. In the West, the weather will continue to be mild, with highs generally in the 50s and 60s for the Northwest and Rockies, 60s and 70s for California and 80s and 90s for the Desert Southwest and the Four Corners region.

In the longer term, the start of May is expected to be mild to warm, leading to increased cooling demand in the South and Southwest. Meanwhile, low demand and mild weather are expected in other regions.

Economic Update

The largest factors affecting the economy have been the Trump administration’s tariff policies and Trump’s comments on potentially firing Federal Reserve Chairman Jerome Powell, which have caused market volatility, lowered consumer confidence, and harmed relationships with key trading partners.

On 4/21, the International Monetary Fund (IMF) issued a report stating that the impact of a U.S.-China trade war would be fully realized in 2026 if current tariff rates hold steady. However, the IMF expects a recession to be unlikely. The IMF reduced Chinese growth rates by 0.6% and 0.5% for 2025 and 2026 respectively, bringing them down to 4.0% for both years. They also downgraded global growth from 3.3% to 2.8% for 2025 and from 3.3% to 2.9% for 2026.

Natural Gas Fundamentals

Current inventories as of 4/24 are 1,934 Bcf with a 478 Bcf deficit to last year and a 44 Bcf deficit compared to the 5-year average.

According to the EIA’s Natural Gas Weekly Update, dry natural gas production grew by 0.5% (0.5 Bcf/d) to an average of 106.3 Bcf/d, while average net imports from Canada decreased by 9.3% (0.6 Bcf/d) from last week. Production was about 6 Bcf/d higher than it was for the same week last year, with volumes higher in the Marcellus and Haynesville regions. Natural gas demand growth continues to be driven by LNG exports as new capacity comes online. Average natural gas deliveries to U.S. LNG export terminals increased by 0.2 Bcf/d from last week to 16.8 Bcf/d this week, according to data from S&P Global Commodity Insights.

In 2024, the Appalachia region (PA, OH and WV) produced the most natural gas, accounting for 31% or 35.6 Bcf/d of marketed natural gas production. The Permian (TX and NM) accounted for 22% of all U.S. production but the vast majority of production growth. The Henry Hub spot price averaged $2.21 per million British thermal units (MMBtu) in 2024, the lowest average annual Henry Hub price ever reported and 16% lower than the 2023 annual average. Higher oil and natural gas prices, along with a build-out of pipeline takeaway capacity, will be critical for natural gas production to keep pace with the growing demand from LNG exports and gas-fired generation.

FERC Capacity Auction Cap

The Federal Energy Regulatory Commission (FERC), in a 4-0 decision on Monday, April 21, approved the PJM Interconnection’s proposal to set a price cap and price floor for its next two capacity auctions. According to FERC, without this collar, the range of prices could have gone from $0/MW-Day to as high as $500/MW-Day. Despite opposition to the decision from its own independent market monitor and other market participants, FERC believes the cap structure addresses “converging” factors such as rapid demand growth, plant retirements, state and federal policies and the slow development of new builds and transmission. By authorizing the capacity auction cap for the next two PJM auctions, FERC is confident that the temporary structure will provide the market price signal to encourage resource development while limiting costs for consumers.

Stay Informed

For more insights like this, we invite you to join us for Energy Market Intel’s return webinar on Wednesday, May 21 at 2 pm EST, where Constellation energy experts will offer detailed and timely updates on factors affecting energy prices such as weather, gas storage and production, and domestic and global economic conditions. Register by visiting  www.constellation.com/marketintelwebinar.

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