Webinar Analysts: Summer Weather, LNG Exports and Capacity Market Updates
During Constellation’s May Energy Market Intelligence Webinar, the Commodities Management Group (CMG) provided comprehensive coverage of current and future factors significantly affecting the energy landscape, including analysis on summer weather patterns, LNG exports and global demand and capacity market updates.
Weather Outlook
Chief Meteorologist Dave Ryan provided a detailed analysis of weather patterns and their potential impacts on the energy markets. This summer is expected to bring greater temperature volatility than in recent years. The Eastern Interconnection region is expected to see below-normal temperatures, while the South is forecasted to experience higher-than-average heat.
The team also discussed the outlook for El Niño and La Niña conditions, as the forecast currently calls for a neutral to weak La Niña. However, there is a possibility of transitioning into a weak El Niño by winter, which could lead to warmer-than-normal conditions.
Crude Oil Market Movement
Oil prices are under downward pressure, driven by a variety of factors including recent diplomatic efforts by the Trump administration in the Middle East. These efforts appear to involve a strategic exchange, offering national security assurances to Arab states concerning Iran in exchange for cooperation on trade, technology and oil price stability.
While lower oil prices help control inflation and support consumer energy affordability, they pose significant challenges for U.S. oil producers, who need higher oil prices to ensure profitable operations and justify continued investment in drilling and exploration. As oil prices near $50 per barrel, concerns are growing about domestic producers potentially adjusting their capital expenditures for future years, which could impact natural gas production due to its close link to oil drilling activities.
Natural Gas Fundamentals
Natural gas production has reached record highs, but future demand, driven by increased consumption across all natural gas sectors, including power generation, residential, commercial, industrial and LNG exports, raises concerns. Storage levels are currently above the five-year average, and continued strong injections could shift the market from a bullish to a neutral stance. End-of-season storage levels are expected to reach around 3.8 trillion cubic feet, which is considered adequate, though a harsh winter could test these reserves.
The growing role of LNG was emphasized, with U.S. export capacity currently at 16.6 Bcf/d and projected to increase to 37 Bcf/d by 2030. This expansion was influenced by global demand shifts, particularly in Europe and developing regions transitioning to cleaner energy sources.
Capacity Auction Updates
The 2025 NERC Summer Reliability Assessment found that several key regions, including ERCOT, MISO and ISONE, are at risk due to tightening reserve margins. Since August 31, 2024, the aggregate peak demand for the NERC control area has increased by 10 GW, more than double the increase from the previous summer, while 7.5 GW of generation has retired, straining reserve margins in certain zones. To address this, regions have been implementing measures to address capacity concerns, including fast-tracking new generation projects. This initiative aims to bring new combined cycle plants and battery storage online to meet anticipated demand growth, particularly from data centers. However, limited turbine manufacturing capacity and tight timelines for upcoming capacity auctions present challenges.
The team also discussed recent capacity auction pricing in MISO and PJM. The latest MISO auction met resource adequacy requirements, but reserve margins declined from 9.0% to 7.9%. Demand growth continues to pressure prices for dispatchable capacity. In PJM, the cap-and-floor pricing method will limit volatility for the next two auctions. Project development through the Reliability Resource Initiative (RRI) will be closely monitored to assess effectiveness by bringing new units online quickly.
Market Trends and Temperature
The webinar concluded with a look at forward power charts, including conversations about “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, June 18 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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