Infinity Insights - Volume 14, Issue 14
MONTHLY UPDATE - APRIL 2025 EDITION
NATURAL GAS
NYMEX Natural Gas is trading around the $4.05 mark. Spot natural gas has softened slightly since early March, as natural gas inventory reserves realized rare March net injections.
The most recent EIA Natural Gas Inventory Report for week ending 3/21 showed a net injections of 37 Bcf, the second consecutive injection reported this season. Current inventory sits at 1,744 Bcf. Inventories are 24% below the year ago mark and 7% below the 5-year average, a substantial improvement to the 5-year deficit.
Inventories have loosened since our last publication. This is due to mild weather across the lower 48 and a small pick-up in production. Most recent EIA data shows production at 105.5 Bcf/day, a 4% increase year-over-year.
EIA’s Short-Term Energy Outlook forecasts US Henry Hub will average $4.20 and $4.50/MMBtu in 2025 and 2026, respectively. This is another increase versus prior publications. EIA sites increased residential and commercial consumption for expected tightening of supply, thus the increase in forecasted pricing.
Spot month natural gas has support at $3.70 with resistance at $4.50.
Calendar year 2025 finds support at $3.95 with resistance at $5.08. Calendar year 2026 has support at $3.94 with resistance at $5.33. Calendar year 2027 has support at $3.35 with resistance at $4.99, a slight increase versus prior month.
Global natural gas prices ($/MMBtu):
Henry Hub (USA): $4.05↓
NBP (UK): $13.27↑
TTF (Dutch) $13.44↓
JKM (Japan/Korea) $13.23↓
Look Back on Winter 2024/2025
In summary, winter 2024/2025 was slightly warmer than the historic average, but was characterized by short-lived spurts of intense cold. For instance, the West South Central region had 9% less heating degree days (a standardized measure of heating demand) versus the historic average November through March, but had 50% more heating degree days for week ending 1/23/2025.
The sudden changes in temperature pushed real-time power prices considerably higher in January and February, particularly in ISO New England and NYISO where more expensive generation was needed such as coal and natural gas. For instance, the Algonquin Citygate that provides natural gas to New England, at it’s peak, January 18 through 21 settled at $33.52/MMBtu, about 6X the average settlement price for the citygate. The natural gas that was used for power generation added further premium to real-time power pricing in the region.
On the other hand, PJM and ERCOT performed well through the erratic weather. Pricing was subdued and there were no calls for curtailment. Past performance and pricing volatility is a considerable driver in pricing future contracts. PJM and ERCOT have grown significantly in capacity growth and peak demand growth, while NYISO and ISO-NE have essentially remained flat in growth over the last 5 years. We expect to see further growth in PJM and ERCOT as pricing stability will attract more manufacturing and datacenter deployment in these markets.
ERCOT Legislature
Senate Bill 388
November 18th Texas Senator Charles Schwertner introduced Texas Senate Bill 388. The purpose of the bill is to require 50% of new Texas power generation after 1/1/2026 to be dispatchable (easily turned on and off) for a duration of at least 8 consecutive hours. The bill explicitly excludes battery energy storage systems, which means the only viable option to meet this criteria is natural gas generation.
The bill was filed November 18, voted out of committee March 11, passed by the Senate on March 19 and sent to House March 20. The bill is currently waiting House Committee assignment. The bill still needs to be passed by the House and signed into law by Governor Greg Abbott.
Our take: SB 388 appears to be further regulation with the goal of bolstering ERCOT’s dependence on natural gas power generation. While pushing for more natural gas generation this bill, if passed, could have a negative effect on the deployment of renewable systems coupled with battery storage systems. As capitalists, we would prefer to see less regulation, and allow for the markets to advance through traditional market mechanisms.
Senate Bill 819
January 16th the Texas Legislature filed Senate Bill 819, which is now pending in the Senate Business & Commerce Committee. The bill’s purpose is to impose new regulation on solar and wind generating facilities. SB 819 would increase fees, permitting requirements, environmental and community oversight, while reducing tax exemptions for properties used for renewable power generation.
Under the proposed bill additional fees would fund a new “renewable energy generation facility cleanup fund”. New permitting requirements include a required permit from the Texas Public Utility Commission to interconnect facilities with a capacity of 10 MW or more after September 1, 2025, or existing facilities expanding over 5 MW in capacity. Applicants would also be required to provide an environmental impact review by the Texas Parks and Wildlife Department and require public meetings near the facility location to provide community input before permits are granted. The bill also includes new setback rules, requiring 100 feet of clearance between property lines and solar arrays and 3,000 feet setbacks for wind facilities.
The bill remains pending in the Senate Business & Commerce Committee where it could remain indefinitely and never pass or proceed to a scheduled vote where it would need a Senate majority to move forward. After a Senate majority vote the bill would require a House majority vote, and finally the Governor would have the option to sign the bill into law or exercise his veto. The March 27 open hearing included mostly community members opposed to the bill. Community members voiced concerns about private property rights being infringed upon and restricting what landowners have found to be a lucrative source of income.
Our take: Texas landowners interconnecting generation to the grid has added to grid reliability and in turn made Texas power more competitive. The ratification of SB 819 would hamper ERCOT generation growth, increase uncertainty and income for Texas landowners and increase cost of power.
Weather
NOAA’s forecasts are showing near to above normal temperatures for most of the lower 48 with some cold developing in the southeast. Drought conditions persist in the Southwest. Forecasts are showing below average precipitation in both the 6-10 day and 8-14 day forecasts. Drought conditions could become an issue heading into the summer as drought limits hydro generation and furthermore, availability of water for steam generation could be scarce.
Market News
March 30 Goldman Sachs released its US Economist Analyst, highlights included raising its 12-month recession probability from 20% to 35%, referencing continued inflation issues due to tariffs. Equity markets are off about 8% from their late-February highs. Treasury yields have consistently fallen since early January indicating either a flight to safety due to growing recession fears or an expectation that inflation will continue slowing.
Client Spotlight: The Morgan Group + Entryway Houston
Morgan Group has supported Entryway Houston's work of empowering individuals and families experiencing homelessness or housing insecurity due to low wages and job loss. Morgan is true partner in every element of their work, from donating equipment used in hands-on training opportunities, to supporting the soft skills development participants through classroom instruction, to ensuring they can fulfill our mission by financially sustain our work.
Above all, Morgan Group is committed to interviewing and hiring the excellent candidates that come through the Entryway program. In 2024, Morgan hired 4 participants, who were hired into leadership roles as community managers.
Morgan invites Entryway to participate in their internal leadership development initiatives, such as their annual retreat where they are able to share our mission with future leaders in the industry.
Morgan opens up class space in their staff trainings, inviting Entryway participants to learn important skills alongside their staff.
Party for a Purpose! - Entryway was the recipient of funds raised that night as Shelly Watson was installed as new HAA board President.