Webinar Analysts: Shifting Weather Patterns, Natural Gas Fundamentals and LNG Trends
During the January Constellation monthly Energy Market Intelligence Webinar, Constellation’s Commodities Management Group (CMG) provided comprehensive coverage of current and future factors significantly affecting the energy landscape, including the substantial shifts in weather patterns, the potential impact of tariffs on Mexico, natural gas fundamentals, LNG trends and the European energy situation.
Weather Report
Chief Meteorologist Dave Ryan discussed significant changes in weather patterns this winter, highlighting the appearance of what feels like a “normal” winter for the first time in many years. The current weather pattern, exacerbated by blocking, is expected to produce a blast of cold air that will encompass about 80% of the nation, with temperatures 10 to 20 degrees below normal. This cold outbreak is expected to produce significant heating demand across the United States.
All Things Economic
Chief Economist Ed Fortunato provided insights into the potential future economic landscape, mainly focusing on trade with Mexico and its implications for the energy markets. As one of the U.S.’s largest trading partners, Mexico acts as a significant manufacturing hub, primarily in the automotive and technology industries. Additionally, Mexico imports a significant amount of U.S. energy products, such as petroleum, due to its struggle to develop the refining capability needed to produce its own petroleum products. The incoming Trump administration has proposed implementing a 25% tariff on imports from Mexico. The discussion focused on how tariffs would impact a country that’s both one of the Gulf Coast refining complex’s top suppliers and its top international customer.
Natural Gas Fundamentals
The colder weather trend has led to a shift in natural gas storage, with the potential for significant storage draws rising due to increased heating demand. Current underground storage levels as of January 10 stand at 3,115 Bcf, -111 Bcf (-3.4%) below year ago levels but still just 77 Bcf (+2.5%) above 5-year average levels. The current cold weather expected in the current 14-day forecast will likely flip the 5-year surplus to a deficit and widen the year ago deficit. If the cold weather carries over into the February forecast as Dave mentioned has turned colder, this could drive NYMEX prices higher if end of March storage predictions fall below ~1,500 Bcf. The next month will be critical for weather demand.
On the production side, December ended at around 106 Bcf/d. However, cold weather has reduced these averages by 2-4 Bcf/d. Strong prices may incentivize producers to respond with more supply, especially in the Permian basin, as this remains the key region for additional pipeline capacity. Looking forward, the Permian basin will remain a key growth region in 2025, with the Matterhorn Express pipeline having begun operations in October and two other pipelines, Hugh Brinson and Blackcomb, slated to come online in 2026.
Liquefied Natural Gas (LNG) Exports
The team provided an update on the status of LNG export terminals, highlighting new projects and their implications for gas supply and prices in Europe. Domestically, Plaquemines Phase 2 began operations in late December, which lifted feed gas demand and export volumes to new highs. Corpus Christi Stage 3 terminal is taking some test gas but is expected to be operational at the end of March or April/May timeframe.
Additionally, there were discussions about Ukraine’s refusal to renegotiate a gas transport agreement with Russia. This situation has left Europe more exposed, increasing the need to import more natural gas, particularly from the U.S.
Market Trends and Temperature
The team concluded the webinar by looking at forward power charts, discussing “the right time to buy,” 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, February 19 at 2 pm ET. Constellation energy experts will offer detailed and timely updates on factors affecting the 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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