Infinity Insights - Volume 15, Issue 17

MONTHLY UPDATE - AUGUST 2025 EDITION

NATURAL GAS

NYMEX Natural Gas has softened materially starting week of July 21st. The softening in spot has not significantly impacted pricing towards the back of the curve. Softening is attributed to a loosening in supply as production reached a monthly record 107.2 Bcf/day in July and hit a peak production of 108.5 Bcf/day on July 18th. LNG feedgas remains sluggish as some liquification facilities have been slow to return to service after maintenance season. Mild weather forecasts have further compounded downward pressure as extreme heat and associated cooling demand appear less likely based on the latest weather models. Inventories sit at 6% above the 5-yr average and 4% below the year-ago mark.

EIA’s latest Short-Term Energy Outlook is forecasting oil to average $58/barrel in 4Q2025 and $50/barrel in early 2026 – a significant decrease from the prior publication. The forecast cites OPEC+ members’ decision to accelerate production. If oil reaches $50/barrel in early 2026 we can expect rig counts and production to fall in mid-2026, tightening supply. YTD US rig counts in totality are down 8%, while the natural gas rig count is up 19%.

The EIA’s report is expecting natural gas to average $3.90 in 4Q2025 and $4.30/MMBtu in 2026. YTD, spot Henry Hub has averaged $3.58/MMBtu.

US electric wholesale prices are expected to be 12% greater than summer ’24 due to elevated natural gas prices compared to last year. Spot natural gas is up about 46% vs. August 2024.

Spot month natural gas has support at $2.65 with resistance at $3.55.
Balance year 2025 finds support at $2.85 with resistance at $3.98. Calendar year 2026 has support at $3.47 with resistance at $4.53. Calendar year 2027 has support at $3.34 with resistance at $4.76.

Global natural gas prices ($/MMBtu):

Henry Hub (USA): $2.90↓
NBP (UK): $10.73↓
TTF (Dutch) $10.34↓
JKM (Japan/Korea) $11.93↓

Weather

NOAA’s forecasts are showing above normal temperatures in the 6-10 Day Outlook for the majority of the continental US with more moderate conditions in the northeast and Great Lakes region. Elevated temperatures are expected to moderate as we approach fall, with September 22nd marking the official end of summer.

Drought conditions have improved considerably throughout the US except for the Rocky Mountain and Southwest regions where drought conditions linger. Near normal to above normal precipitation forecasted in these regions is expected to provide some relief.

Atlantic activity is picking up. Tropical Storm Erin is gaining strength in the mid-Atlantic, with a west-northwest trajectory. The system is expected to turn further north over the weekend where it could impact the Virgin Islands and Puerto Rico with heavy rain associated with the system’s outer bands. Currently, the system does not pose a threat to the continental US.

Disturbance 1, a tropical wave producing disorganized showers and thunderstorms southeast of the Yucatan Peninsula is moving north-northwest. The system is expected to cross the Yucatan, which should further disorganize the system when it finally reaches the Gulf of America. This system has only a 20% chance of cyclone formation in the next 7 days. The disturbance should bring rain to the Gulf Coast.

Reminder: Atlantic hurricane season peaks in mid-September and officially ends November 30th.

Texas Energy Fund

August 4th, Texas Governor Greg Abbott announced a loan agreement between the Texas Public Utility Commission and NRG through the Texas Energy Fund (TEF) to provide up to $216M over 20 years at an interest rate of 3% for expansion of NRG’s TH Wharton Generating Station in Houston. TH Wharton Generating Station’s current capacity is 1,002MW. The expansion, partially subsidized by the TEF, will bring on 2 additional simple cycle natural gas units adding 456MW of capacity. The expansion is budgeted to cost $360M and operational by summer 2026.

June 2025 a Texas Energy Fund agreement was announcement with the Kerrville Public Utility Board, funding about 60% of the $175M project to bring a new natural gas power plant to Colorado County, Texas, approximately 80 miles west of Houston called Rock Island Generation Project. The new power plant will feature six high-efficiency simple cycle natural gas engines, producing 122MW of dispatchable power, with an expected operational date of June 2027. Rock Island Generation Project was the first development or expansion project to secure TEF funds. Governor Abbott declared “today, Texas made a 122MW investment in power capabilities of the grid to ensure that Texans have access to affordable and reliable power. This natural gas power plant will help bear the load of the largest electricity demand area in the state as we continue our mission to add more power to the grid and power more homes.”

For our readers: Simple cycle or single cycle natural gas units (as referenced above) are natural gas power plants where natural gas is burnt to spin turbines, produce electricity and the exhaust gases are exhausted into the environment. These power plants are also known as peaker plants.

Combined cycle natural gas units are similar to simple or single cycle units in that natural gas fuels a turbine to generate electricity. The two types of units differ in that in a combined cycle unit the unit’s hot exhaust gases are contained and sent through a heat recovery steam generator (HRSG) to produce steam that powers a secondary turbine to produce additional electricity.

The two types of generating plants have different advantages and are suitable for different application. Simple/single cycle plants are less efficient, typically 30-40% efficiency, while combined cycle plants run at about 50-60% efficiency. Simple/single cycle plants require less capital with the absence of a second turbine in the HRSG. Most importantly in this environment, simple/single cycle units are far more dispatchable than combined cycle units. In a combined cycle configuration the HRSG has to be brought to temperature before the combined cycle can begin. The process of bringing the HRSG to temperature and running the plant takes hours, whereas a simple/single cycle can be dispatched in 10-20 minutes, typically. Combined cycle generation, in most cases, is used for base load generation, meaning the output is consistent and less variable. Simple/single cycle units are well suited for a grid that is heavily dependent on intermittent renewables, where solar and wind may not perform as expected and additional generation is needed instantaneously.

ERCOT’s Real-Time Co-Optimization + Batteries Starts in December

ERCOT plans to launch its Real-Time Co-Optimization, including Battery Energy Storage Resources (RTC+B) December 5, 2025. This major market overhaul, the most significant since 2010, enables simultaneous dispatch of energy and ancillary services in real-time, improving efficiency, grid reliability, and integration of about 9.5 GW of battery storage. Currently, ancillary services are secured in the day-ahead market and do not account for real-time conditions and pricing. RTC+B replaces the Operating Reserve Demand Curve (ORDC) price adders with Market Clearing Prices for Capacity (MCPCs), improving price transparency and overall pricing efficiency. RTC+B is expected to save $1B annually for rate-payers. The RTC+B program is a move only possible because of the growth of battery energy storage systems (BESS) in Texas. Currently, BESS account for approximately 70% of all ancillary services in ERCOT. The RTC+B will lean even more heavily on BESS, we expect to see more frequent switching between charging/discharging and further deployment of BESS. This change of rule enhances an already efficient market, while further incentivizing battery deployment.

Market News

Unemployment moved up from 4.1% in June to 4.2% in July. July CPI came in at .2% on a seasonally adjusted basis and 2.7% over the trailing 12 months – a marginal increase. The market is already pricing in a September 25bps cut by the Fed. This would mark the first cut since December 2024. Goldman Sachs is forecasting three 25bps cuts in 2025. Consumer sentiment ticked slightly higher in July and stands at a 5-month high. The S&P 500 and Nasdaq Composite are at all-time highs. President Trump and Putin plan to meet Friday in Alaska in hopes of negotiating a ceasefire with Ukraine. It’s difficult to speculate on the outcome of this summit, but the outcome will definitely impact markets.

Client Spotlight – Holocaust Museum Houston

Founded on a vision in 1996 by Holocaust survivor and longtime Houston resident Siegi Izakson, Holocaust Museum Houston (HMH) opened its doors in March 1996 with a mission to educate the public about the consequences of prejudice, hatred, and apathy. Izakson was driven by the urgency to preserve the personal histories of Holocaust survivors and ensure that future generations learn from the past. As he said at the Museum’s opening, “This means the Holocaust story will not go away.”

In June 2019, HMH completed a $34 million expansion, more than doubling its size to 57,000 square feet. Now ranked as the fourth largest Holocaust museum in the United States, the bilingual (English and Spanish) facility includes permanent and rotating galleries, a research library, classrooms, a café, a 187-seat indoor theater, and a 175-seat outdoor amphitheater, all designed to inspire reflection, education, and action.

One of HMH’s most impactful outreach initiatives is the Educator in Motion (EIM) program, which provides free, on-site and virtual lessons on the Holocaust, genocide, social justice, and active citizenship. These programs are available in both English and Spanish, and incorporate elements of social studies, language arts, and fine arts to deepen engagement. All materials are provided at no cost to students, teachers, or schools. A participating teacher recently shared, “My students walked away not just more informed, but more compassionate.” In-person visits are offered across Greater Houston, and virtual sessions are available free of charge nationwide.

Each year, the Museum’s annual luncheon raises essential funds supporting Holocaust and Human Rights education for students, teachers, members, and the public. This year, the 2025 Guardian of the Human Spirit Luncheon honoring Linda L. Burger will be held on Monday, November 24, 2025, at Hilton Americas-Houston.

To support this mission and help sustain these vital programs, visit: https://hmh.org/give/ways-to-give/