Webinar Analysts: Hurricane Season, Natural Gas Fundamentals and Capacity Market Updates
During the October Constellation monthly Energy Market Intelligence Webinar, Constellation’s Commodities Management Group (CMG) provided comprehensive coverage of various significant factors affecting the energy landscape. The webinar featured discussions on current drivers of energy market prices including recent hurricane impacts, recent rate cuts by the Fed, natural gas fundamentals and oil markets
Weather Report
The team kicked off the webinar by covering important weather forecasts and insights, discussing the current hurricane season, which has 13 named storms so far, with five making landfall in the United States. This hurricane season was highlighted as having an unusual, including the first Category 5 hurricane recorded in June and the longest stretch of quiet period in over 50 years. The team also discussed an outlook for the remainder of the hurricane season and the upcoming winter, predicting a mild winter dominated by a weak La Niña pattern.
All Things Economic
Chief Economist, Ed Fortunato, shared insights on the economy, focusing on interest rates, energy impacts and the Federal Reserve’s actions. The recent 50 basis point rate cut by the Federal Reserve and its implications for the economy were highlighted, along with the strong performance of the equity markets, driven by AI and a broader-based rally. Fortunato also discussed the impact of energy production and consumption on the economy, noting that U.S. oil production has been rising while China, the largest importer of oil, has been experiencing a slowdown.
Natural Gas Fundamentals
Constellation’s energy market experts then analyzed the factors influencing natural gas prices. They noted that natural gas production is holding steady in the 101-102 Bcf/d range, with some cutbacks by Gulf of Mexico producers. Although there have been several below-average injections, the forecasts for end-of-season storage inventory have not changed significantly. The team also discussed the impact of higher oil prices on natural gas supply, suggesting that increased oil production in the Permian Basin could lead to higher associated natural gas production.
Fiscal conservatism continues to guide producers as they await a market signal. Space heating demands and a decline in storage could boost prices enough to encourage an increase in drilling activity, which would be a bearish influence. The U.S. is expected to begin the heating season with a comfortable amount of gas in storage, and a winter forecast suggesting heating demand may fall below average. If the La Niña conditions continue, we may end the winter with more than 2 Tcf remaining in storage.
Oil Markets
Recent developments in the oil markets include the impact of geopolitical events on oil prices. The announcement that Israel would not attack Iranian oil production facilities led to a drop in prices. However, a larger threat to global supply lies in the potential for shutting down the Straits of Hormuz. The U.S., while being the world’s largest producer of crude oil, still imports approximately 6 million barrels per day, with only 1 million barrels per day coming from OPEC. This means that troubles in OPEC are much more muted for the U.S. than in the past.
Capacity Markets
The team commented on recent capacity markets developments, focusing on PJM and noting the recent six-month delay requested by PJM to FERC for the 2026/’27. They discussed the challenges associated with these changes and urged market participants to continue to follow news developments. PJM’s site Inside the Lines (https://insidelines.pjm.com/) remains an excellent source for news on market developments.
Market Trends and Temperature
The team concluded the webinar by looking at forward power charts, the “Market Temperature,” and other factors affecting the energy market.
We invite you to join us for our next Energy Market Intel Webinar on Wednesday, November 20 at 2 pm ET. Constellation energy experts will offer detailed and timely updates on factors affecting energy landscape such as weather, natural gas storage and production, and domestic and global economic conditions. Register by visiting www.constellation.com/marketintelwebinar.
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