August Energy Market Update
Staying informed on the trends impacting the energy market can help businesses make smart energy purchasing decisions. 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 this information, businesses can be better informed to navigate the complexities of the energy market.
Weather Outlook
September forecasts point to a warmer-than-normal pattern in the East, with more variable conditions averaging near normal in the West. This outlook is influenced by both strong El Niño conditions and recent temperature trends in the East. However, this forecast presents several challenges. The background El Niño state supports a pattern with the greatest warmth centered over the central United States. Long-range models remain mixed, although they generally favor a warmer pattern across the South and greater variability in the Northeast and interior West with temperatures averaging near normal.
All Things Economic
A weaker-than-expected July jobs report and high oil prices are slowing down parts of the economy, while continued investment in AI technologies continues to support overall growth.
The July report showed a loss of 23,000 jobs in July, largely due to cuts in government jobs, while unemployment declined to 4.1% from 4.2% as more Americans exited the labor force. The Fed is focused on inflation, which has grown by more than 2%, with the latest July figures at 3.4% for overall inflation and 2.5% for Core inflation. At the same time, a slowing job market will remain on the Fed’s radar.
Natural Gas Fundamentals
Natural gas storage inventories continue to track above the five-year historical average by at least 5%, providing a cushion against weather-driven increases and helping moderate supply concerns this coming winter. The Energy Information Administration’s (EIA) short-term outlook has inventories at 3,985 Bcf at the end of October and 1,906 Bcf at the end of March 2027. As of the week ending August 7th, inventories stand at 3,153 Bcf.
Natural gas production is averaging approximately 111 Bcf/day at the start of August versus 107.7 Bcf/day last year. WTI oil prices were at $85/bbl as Iran continues to exert leverage over the Strait of Hormuz and the 60-day ceasefire between Iran and the U.S. expired on August 17th. Global oil inventories continue to decline, resulting in record crude exports from the U.S. Gulf Coast.
Battery Storage Update
Battery storage in the U.S. has seen exponential growth over the past three years, increasing at an annual growth rate of over 70% and reaching a total capacity of 51.8 gigawatts (GW). The EIA estimates that another 14 GW will come online by the end of the year and anticipates total capacity will more than double by the end of 2029.
Forward REC Price Trends
Resource adequacy concerns and increasing demand forecasts centered on large load interconnections may indirectly support Renewable Energy Certificate (REC) demand across PJM, NYISO and New England in the future. PJM Tier 1 and New England Class 1 REC markets continue to be supported by state RPS requirements, although several states continue to look at potential modifications to compliance and mandatory programs due to affordability concerns.
Stay Informed
For more insights like this, we invite you to join us for Energy Market Intel’s return webinar on Wednesday, September 16 at 2 pm ET, where Constellation’s panel of energy professionals 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.
Register for our September Webinar
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