Energy futures prices in the U.S. for winter 2024-2025 show significant declines compared to the previous year, largely due to high levels of natural gas inventories. According to the U.S. Energy Information Administration (EIA), the country is entering the winter season with the largest natural gas reserves since 2016.
Shayne Willette, a senior analyst at S&P Global Commodity Insights, stated, “With historically low prices in 2024, producers have reduced production to stabilize prices. Meanwhile, electricity generators have greatly benefited from this weakness, recording a record consumption of gas.”
Data from S&P Global reveals that forward prices for January and February in Western regions such as SP15 (California) are down 32% and 37%, respectively, compared to last year. A similar trend is observed in the ERCOT North Hub (Texas), where January and February prices are 27% and 31% lower.
Eastern regions defy the trend
Conversely, the PJM West Hub (East) shows a slight increase in forward prices for January (+5%) and February (+1%) compared to 2024. This divergence is explained by expectations surrounding December’s capacity pricing auction, following record-high levels in the July auction.
Weather forecasts also contribute to these regional dynamics. The National Weather Service’s Climate Prediction Center predicts above-normal temperatures in the southern and northeastern parts of the country. In contrast, below-normal temperatures are expected in the Pacific Northwest and northern Midwest, which could influence energy consumption levels.
Natural gas inventories: a key factor
The U.S. ended the gas injection season with a volume of 3,922 billion cubic feet (Bcf), 6% above the five-year average, despite below-average injections this year. According to the EIA, the final weeks of the injection season, which ended on October 31, recorded above-average additions.
The EIA forecasts total natural gas withdrawals during the 2024-2025 heating season to reach 1,957 Bcf. If the winter is severe, this consumption could tighten stocks, pushing natural gas prices—and subsequently electricity prices—higher.
Willette concluded: “The speed and intensity of inventory depletion will largely depend on winter weather conditions.”
