The Shipley Energy Commercial Solutions Team is excited to share the September Energy Market Update to inform you of trends, weather, and other factors impacting the energy market.
Several critical factors are shaping global energy markets, with significant implications for our region. As we approach the Fall season, these dynamics are influencing prices and market sentiment:
OPEC+ Production Strategy: OPEC+’s unexpected decision on September 7, 2025, to increase production by 137,000 barrels per day in October initially unsettled markets. However, planned compensation cuts are expected to temper downward price pressure. The ongoing tension between OPEC’s production hikes and its efforts to maintain global market share continues to create a bearish overhang, with short-covering rallies providing only temporary relief.
Russia-Ukraine Conflict and Supply Risks: Persistent attacks on Russian oil and gas infrastructure, including Ukraine’s recent strike on a diesel storage facility, are tightening global distillate supplies. These disruptions, coupled with the potential for new sanctions, pose significant risks to energy market stability, particularly for diesel, where inventories are already constrained.
Fall Refinery Maintenance: Seasonal refinery maintenance is set to exacerbate supply pressures. US gasoline inventories have declined for 7 consecutive weeks, with a notable 3.8 million barrel draw in the latest report, leaving a 3.5 million barrel deficit. This tightening could intensify as refineries shift focus to distillate production, which has consistently exceeded 5 million barrels per day in recent weeks.
China’s Rising Crude Demand: Increased crude oil demand from China is adding upward pressure on global prices, counterbalancing some of the bearish sentiment driven by OPEC+ production increases and anticipated Q4 supply surpluses.
Oil and Product Market Trends: Oil prices have trended toward multi-month lows, with West Texas Intermediate (WTI) and Brent both down approximately 3% week-to-week, reflecting post-Labor Day rally fatigue and contract shifts. Gasoline futures, particularly the RBOB contract, fell sharply by 10% due to the September-to-October specification change, while ULSD saw a modest increase of less than 1%, supported by robust diesel crack spreads above $30 per barrel.
Market Sentiment: Low speculative interest, with WTI open interest below 2 million contracts, signals limited upside potential amid expectations of a Q4 global supply surplus. Prices are testing oversold conditions, but a sustained rebound is needed to shift sentiment. Diesel markets, however, show resilience, with potential to break through resistance at $2.40 per gallon, which could lift the broader energy complex.
Action Advice
These dynamics underscore a complex and volatile outlook for energy markets this Fall, with supply constraints, geopolitical risks, and strategic production decisions driving price movements. With so many factors impacting markets, reach out to your account manager to discuss the best strategies to meet your energy needs.
After a hot start to summer, August was very mild. The 12-month electricity price at the start of the month was $46.97/MWh in Ohio and finished the month at $45.19/MWh. In PA, it decreased from $51.15/MWh to $50.03. There was more movement in the longer terms. The 36-month strip in OH fell $1.13 to end the month at $46.78. PA saw a smaller decrease of $0.39 to end at $52.10. We’re now into the higher capacity rates (started 6/1/2025). For many customers this will make up a substantial portion of their all-in price and is not going to decrease for at least the next 21 months.
We continue to see market fundamentals that are potentially worrisome for energy buyers:
Natural Gas storage injection levels are now 173 Bcf above the 5-year average but 73 Bcf below last year.
PJM’s Capacity Auction for rates effective 6/1/2026 – 5/31/2027 came in at the FERC imposed cap in all zones with a price of $329.17/MW-Day.
The next capacity auction will take place in December. Given the short period between auctions, it’s likely that capacity rates for 6/1/2027 – 5/31/2026 will also hit the FERC cap price.
The wholesale energy markets watch these factors, and changes can push prices up or down on a daily basis. Based on where we stand now, we recommend evaluating these strategies:
We recommend locking in your energy price for the next 24 months as soon as practical. With the forward energy curve flattening, longer terms are becoming more attractive. While there’s always the potential for prices to move down, given the long-term issues PJM faces, we believe the upside price risk is higher.
Consider a capacity and or transmission passthrough structure. While we now have a capacity cap for unknown periods through 5/31/2028, different suppliers may use different estimates, making these offers more difficult to compare than a passthrough structure.
Invest in a plan to reduce your peak demand and overall energy consumption, if you haven’t already. With the rise in capacity prices seemingly here to stay, lowering your associated PLC and or NSPL tag could have substantial price benefits for the following year.
Want to help your business navigate the current market? Get started with your Shipley Energy Advisor today!
Natural gas storage is currently 173 Bcf over the 5-year average, and 73 Bcf behind last year’s level. We are on pace to achieve a healthy level of storage by the winter – despite the strong gas demand we saw in August.
It is forecasted that natural gas consumption in the US will increase 1% for the 2025 year, setting a record of 91.4 billion cubic feet per day. This forecast is determined, in part, by the colder-than-normal winter to start 2025. In January 2025, 126.8 Bcf/day was consumed which was 5% higher than our previous record set in January 2024. February of 2025 also set a record of 5% higher than the previous highest consuming February in 2021. In the United States, natural gas is the most prevalent source of electricity generation, aiding in such significant consumption data.
Per Platts data, dry gas production has also been at record levels, averaging 108 Bcf/day. As both supply and demand consistently grow, this will only add to price volatility.
Factors impacting the natural gas markets currently:
Weather trends and NG pricing versus coal will determine the pace of injections.
A storm in the gulf could prohibit LNG exports which would result in a bearish event.
Recent volatility has been attributed to weather forecasts which impact demand, and storage injections.
Action Advice
Please refer to the chart below of the January 2026 NYMEX and the sell-off from last March. We think for those who have waited to lock in their price, these levels present an opportunity. As always, we recommend checking in frequently with your account manager.
Other rate options include Basis Only or NYMEX Lock deals to separate the two elements of your natural gas supply price to look for potential value vs standard Fixed pricing. For those who want to float their NYMEX, consider a cap and floor structure to economically manage your risk. Ask your Account Manager for details.
September 2025 Natural Gas NYMEX Settlement Price: $2.867/MMBtu
Last month: August 2025 Natural Gas NYMEX Settlement Price: $3.081/MMBtu
Last year: September 2024 Natural Gas NYMEX Settlement Price: $1.930/MMBtu
Disclaimer: The market update is intended solely for informational purposes only. Shipley Energy Company does not warrant or attest to its accuracy. All actions and judgments taken in response to this report are the recipient’s sole responsibility. Shipley Energy Company shall not be liable for any direct, indirect, incidental, consequential, special, or exemplary damages or lost profit resulting from these market updates.
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