Infinity Insights - Volume 15, Issue 16
MONTHLY UPDATE - JULY 2025 EDITION
NATURAL GAS
NYMEX Natural Gas gained some ground mid-June trading just below the $4 handle. Prices have settled around $3.50 with robust injections reported. Natural Gas Inventory Report was expected to be bullish as hot weather made an early appearance this season in the Midwest and Northeast. Natural gas powerburn late-June has far exceeded that of June 2024.
EIA’s latest Short-Term Energy Outlook is forecasting oil to average $61/barrel in 2025 and $59/barrel in 2026. Natural gas in 2025 is expected to average $4.00 and $4.90 in 2026. Latest pricing represents a slight discounts to 2025 forecasts and premium added to 2026. EIA stated “higher natural gas prices in 2025 and 2026 are the result of strong export growth that persistently outpaces US natural gas production”. Also worth noting, EIA updated its forecast for electric growth from 2% in 2025 and 2026 to 3% in 2025 and 5% in 2026 pointing to commercial growth as new datacenters come online.
Spot month natural gas has support at $2.90 with resistance at $3.98.
Balance year 2025 finds support at $3.28 with resistance at $4.51. Calendar year 2026 has support at $3.78 with resistance at $4.81. Calendar year 2027 has support at $3.50 with resistance at $5.01.
The current trend is showing a softening in balance year ’25, a flat ’26 and firming of ’27 and ’28. This is mainly attributed to notable continued and expected growth in LNG exports.
Global natural gas prices ($/MMBtu):
Henry Hub (USA): $3.51↑
NBP (UK): $10.91↓
TTF (Dutch) $10.66↓
JKM (Japan/Korea) $13.17↑
Weather
NOAA’s forecasts are showing above normal temperatures in the 6-10 Day Outlook for the vast majority of the continental US. Nevada, Utah and part of New York will see considerably higher temperatures. The southwest continues suffering from drought, although there may be some relief as above normal precipitation is expecting in the coming weeks.
Post-Tropical Cyclone Chantal is lingering in the northeast. NOAA notes a threat of flash fooding in Delmarva, New Jersey, and eastern Pennsylvania.
A low-pressure system southwest of Mexico is marginally conducive for cyclone formation in the next 7-days. This system is travelling northwest and should pose no threat to the continental US.
Ocean heat content in the Main Development Region is slightly below the 10-yr average, dropping nicely over the last 2 weeks, standing well below 2023 and 2024 marks for this time of year.
New Jersey Energy Storage Program
June 18 New Jersey’s Board of Public Utilities approved Phase 1 of GSESP (Garden State Energy Storage Program), a multi-phased program designed to deploy 2,000 MW of storage capacity in New Jersey by 2030. The program is a part of New Jersey’s Clean Energy Act of 2018 with a goal of 100% clean energy for the state by 2050. The first phase of the program is to procure 1,000 MW of energy storage over the next 12 months. The first solicitation for energy storage is aimed at procurement of between 350 MW and 750 MW by October 31st and the remaining to be procured in the first half of 2026.
The Board of Public Utilities sees the GSESP as a way to deploy more intermittent renewables responsibly. By providing energy storage back-up the state can rely more heavily on renewables while maintaining grid resilience. According to Solar Energy Industries Association, New Jersey ranks 11th of all states in solar capacity at an impressive 5,627 MW of installed capacity. New Jersey has generously subsidized solar through Administratively Determined Incentive (guaranteed pricing over a 15-yr period), sales and property tax exemptions, net metering and a robust community solar program. The move by the Board of Public Utilities to provide 2,000 MW of energy storage will help the grid when renewables do not perform and help limit pricing volatility.
NOAA 2026 Budget Cuts
The White House Office of Management and Budget has provided NOAA’s 2026 preliminary budget. The proposed budget would result in slashing spending by $1.6-$1.8 billion, almost a 30% reduction vs. the 2025’s budget. The 2026 federal fiscal year begins October 1. The proposed budget would still needs to pass the House, Senate and get the president’s signature. At this time the probability of passing the proposed budget is uncertain.
The budget cuts would eliminate NOAA’s Office of Oceanic and Atmospheric Research and essentially all climate change research. Most impactful for hurricane prone areas would be the shuttering of AOML (Atlantic Oceanographic and Meteorological Laboratory) and HRD (Hurricane Research Division). The AOML is located in Miami and is mostly focused on hurricane science, climate variability and change, ocean health and climate modeling. The HRD, a division of AOML, manages NOAA’s Hurricane Hunter aircraft missions and the latest hurricane forecast models amongst other crucial programs.
The discontinuation of critical weather satellites could have severe impacts on NOAA’s ability to forecast hurricane trajectory and intensity. Particularly, the SSMIS (Special Sensor Microwave Imager/Sounder), a US Air Force Defense Meteorological Satellite Program faces immediate termination. SSMIS provides 3D x-rays, essentially CT scans of hurricanes and tropical storms that can be used for accurate forecasts of system intensity and movements. Michael Lowry, a hurricane specialist pressed NOAA about the shuddering of this program and received a recommendation from NOAA and the Department of Defense suggesting meteorologists would still have access to ATMS (Advanced Technology Microwave Sounder) data. As highlighted below by Mike Lowry using the US Naval Research Laboratory imagery, we can see SSMIS provides far superior imaging than ATMS. Note the distinguished eye and bands surrounding the system, whereas the ATMS inferior imagery merely identifies a system with highly limited detail. The loss of SSMIS would be a huge loss for hurricane forecasting. The question is whether other government organization or private industry will fill the data vacuum by deploying alternative options. The cost to deploy and operate satellites has dropped drastically as private companies have entered this segment. We would not be surprised to see private companies fill the data gap as these forecasts hold incredible value. The timing of these cuts are especially unfortunate as we enter hurricane season.
SSMIS vs. ATMS
One Big Beautiful Bill
Trump’s One Big Beautiful Bill passed the Senate and House and has now been signed into law by President Trump on July 4th. From an energy perspective, the new legislature cuts back Biden-era incentives for renewable deployment while supporting fossil fuel mineral leasing on federal lands and waters.
• Clean Electricity Credits – credits for wind, solar and battery storage will not be eligible for projects that begin construction more than 60 days after the bill is passed or projects that are not in service by 12/31/28. Nuclear projects starting before 2029 are still eligible for the credit.
• Electric Vehicle Credits – new EV credits will be phased out by 2026.
• Hydrogen Production Credit – facilities starting construction after 12/31/25 will not be eligible for the credit.
• Residential and Efficiency Credits – energy-efficient home improvements, residential clean energy generation
projects, and new energy-efficient homes will not be eligible for the credit after 12/31/25.
In summary, the bill has come a long way since it was initially proposed. At first, the bill included additional taxes on wind and solar projects. These punitive policies were dropped after negotiations.
The new laws will make fossil fuels more available and affordable while renewable power becomes more expensive as these projects lose their tax incentives.
As demand for electricity continues growing solar coupled with battery has proven to be the fastest grid scale generating source to be deployed. Setbacks for wind, solar and battery are not conducive for this power-hungry environment. GE Vernova recently announced a backlog for their natural gas turbines extending into 2028 and 2029. This leaves the energy sector in a position where there are few quickly deployable generating options with a massive backlog and lead times for new thermal generation.
We’ve seen coal generation pick up in some markets during times of elevated pricing of natural gas. In the short-term, it appears coal may have a small resurgence since there’s some readily available existing capacity, which will certainly be utilized as we approach peak summer cooling demand and a general underlying growth in demand. Long-term, nuclear may be well positions to fill this gap but we’ll have to see. In the short-term we expect to see some price softening as energy from fossil fuel sources costs come down. On the other hand, we expect to see renewable deployment slow down drastically. Although renewable projects are capital intensive to start, they are not dependent on commodity prices (natural gas, oil, coal) for fuel. As the generation mix sways back towards fossil fuels, in the long-term we may see some scarcity as deployment is hampered, resulting in higher prices. Again, this is to be determined.
June Heatwave Yields Pricing Volatility for Midwest and New England
US experienced two major heat waves during week ending June 28th. The systems’ greatest impacts were felt in the Midwest and New England. The Midwest had 103 CDD’s (cooling degree days), a 104% deviation from the norm and New England had 63 CDD’s, a 174% deviation from norm.
As a result, PJM issued a Maximum Generation Alert and Load Management Alert. These alerts include instructions to transmission and generator owners to determine if maintenance and testing on equipment can be deferred or cancelled. These orders are issued at times of scarcity and aim to ensure all available generating sources are running at maximum capacity. Although we did not see forced outages we did see extreme pricing volatility.
In the Midwest, PJM West, the largest Hub in the PJM ISO servicing Pennsylvania, Ohio and West Virginia averaged $125/MW for the week and peaked at $1,904/MW.
Comed, servicing the Chicago area averaged $110/MW for the week and peaked at $1,614/MW.
In New England, WCMASS, servicing Massachusetts averaged $90/MW for the week and peaked at $1,112/MW. Connecticut averaged $90/MW for the week and peaked at $1,108/MW.
Pricing volatility impacts future contract pricing and highlights the region’s difficulty in managing high demand associated with unusually hot weather for this time of year.
Market News
May CPI came in at .1% on a seasonally adjusted basis and 2.4% over the trailing 12 months. Inflation appears to be under control. Odds of a July rate cut by the Fed are highly unlikely after a strong June Jobs Report showed unemployment unexpectedly falling. Markets are pricing in 25bps cuts starting in September and additional cuts later in the year. Consumer sentiment rebounded nicely in June. Unemployment sits at a healthy 4.1%. US equities are just off all-time highs.