1. Northeast power prices are especially sensitive to LNG.

Low natural gas storage in Europe and uncertainty in the Middle East could keep LNG prices high, affecting gas and power prices in New England and parts of New York.

2. El Niño points to milder weather, but intense winter storms are still possible.

The outlook favors a warmer December and February. However, a strong El Niño doesn’t rule out periods of severe cold.

3. PJM has less room to absorb periods of intense cold weather.

With less excess capacity, a prolonged or widespread weather event could put more pressure on prices and limit PJM’s ability to help neighboring regions.

4. More solar and battery storage have strengthened ERCOT's position.

ERCOT is better positioned to handle severe winter conditions than it was several years ago, though a major storm could still create supply and demand challenges.

5. Electricity and natural gas buying strategies depend on the region.

Energy buyers face different conditions across regions. Keeping some winter hedges in place and spreading remaining purchases over time can help manage exposure to price changes.

What do these market outlooks mean for your organization?

Connect with an energy advisor to discuss what these market outlooks mean, or get a free Energy Physical for a closer look at your energy strategy and opportunities to strengthen it.

Watch the Full Live With 5 Recording Below

The full Live With 5 discussion looks more closely at Northeast LNG exposure, PJM’s tighter capacity, and ERCOT’s improved position going into winter. Watch the recording below.

Webinar Q&A

Q: How is the conflict in the Middle East affecting power markets and energy prices?

A: The effects are strongest in New England and the Northeast, where natural gas prices are tied to LNG imports. The conflict and Europe’s low gas storage have pushed LNG prices up, which raises the cost of gas delivered to Boston and can affect New York and New England power prices.

The impact is more muted farther west and south.

Q: How many U.S. LNG plants are online or under construction? 

A: Eric said it’s difficult to give a reliable count because some facilities are small and modular. He gave a sense of scale instead: U.S. LNG exports average about 18 billion cubic feet per day, against production of about 110 billion cubic feet per day.

Q: As electricity demand grows and PJM has less excess capacity, what could that mean for reliability and power prices this winter? 

A: The risk depends on how cold a weather event is and how long it lasts. PJM’s generation mix has not changed much in recent years, so its ability to handle a prolonged cold snap is broadly similar to past winters.

Less excess capacity makes the market tighter and prices more likely to rise. It can also leave PJM with less ability to support neighboring regions during a widespread storm.

Q: What impact will El Niño have on this winter? 

A: A very strong El Niño often brings a warmer December in the East and Northeast, followed by a mixed January and warmer February. The available comparisons are limited, but the market has already priced in a milder winter, contributing to lower natural gas prices. Cold snaps are still possible.

Q: What could a hurricane in the Gulf of Mexico do to natural gas prices? 

A: The impact on natural gas supply is likely small because relatively little U.S. gas production now comes from the Gulf. A late-season storm could also reduce demand by cooling temperatures. The overall market impact is likely minimal, though serious physical damage could still affect demand.

Q: How do solar and battery storage affect ERCOT? 

A: More solar and batteries have strengthened ERCOT’s ability to manage a winter event compared with several years ago. This improves the odds of handling a severe event, though it doesn’t guarantee the grid would avoid problems in a storm as severe as Winter Storm Uri.

Q: With NYMEX gas prices falling but PJM power prices staying high, would a severe winter or continued conflict in the Strait of Hormuz push PJM prices higher? 

A: PJM has seen unexpected price volatility, including very high prices during a mild afternoon in September. Declining reserve margins are keeping the market tight and making it harder for forward prices to fall. ERCOT’s reserve margins, by contrast, are increasing.

Wondering what this winter’s market outlook means
for your energy strategy?