Energy Market Update: March 2025 Recap

After a bitter cold start to the year, March brought generally above average temps.  Despite the mild weather, forward terms continue to rise. The 12-month electricity price at the start of the month was $50.31/MWh in Ohio and was $52.61/MWh by the end of the month.  In PA, it increased from $55.15/MWh to $57.88.   Looking at longer terms, the 36-month strip in OH rose $2.19 to end the month at $50.25.  PA was similar with a $2.28 rise to end at $55.54. As we continue to get closer to the start of higher capacity prices on 6/1/2025, end users will see their prices rise as more of those high-priced months are considered in their quotes.

With the cold nearly behind us for the season and natural gas storage still tight we now look toward summer heat as the main price driver. We continue to see market fundamentals that are worrisome for energy buyers:

• The number of US gas drilling rigs is about 15% lower than this time last year.
• Natural Gas storage injection levels are currently 80 BCF below the 5-year average and 491 BCF below last year.  But the gap to the five-year average has been narrowing.
• PJM continues to face issues related to its capacity market structure and as a result of cases brought against them, have moved the 26/27 auction to July.  There are indications that PJM has agreed to a minimum and maximum rate for the 26/27 and 27/28 auctions that would at least give a more limited range of potential prices.  This change has been submitted by PJM and now awaits FERC approval.

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 through at least the next 12 months as soon as practical.  With the forward curve flattening, longer terms are becoming more attractive.
• Consider a capacity and or transmission passthrough structure.  These contracts avoid the premium that suppliers typically add to account for unknown rates and customer attributes.
• Invest in a plan to reduce your peak demand and overall energy consumption, if you haven’t already.  With the looming rise in capacity prices, lowering your associated PLC tag could have substantial price benefits for the following year.

Action Advice

Your to-do list for April and the heading into summer:

• Make sure you have a good relationship with a trusted energy advisor – you will want to have someone with experience and expertise watching the markets for you.
• As you budget for 2025 and beyond, expect prices to be higher than you are paying now.
• Monitor the broader economic conditions as these can influence energy prices.

Want to help your business navigate the current market? Get started with your Shipley Energy Advisor today!

Contact An Advisor ->

Natural Gas Market Update

May 2025 is currently trading at $3.66/mmbtu following the expiration of the April NYMEX contract at $3.950/mmbtu. May futures saw a spike in pricing after near term weather forecasts predicted cooler-than-normal temperatures. If this holds, it would boost demand by nearly 17% above the 5-year average.

Natural gas storage numbers are increasing slowly with March’s warmer than average weather trend, especially East of the Rockies. Total storage activity for the month of March was a net injection of 13Bcf. This is an early start to the injection season.

Fuel switching in March caused a sharp decline in US power sector gas demand. The high price of natural gas made coal fired generation the cheaper option.  

People’s Utility Company is raising commodity supply costs again. After a 43% increase from March 1st, they are now filing for an additional 14% increase for residential rates, with a similar increase for Small General Service commercial customers.

Duke Energy’s Natural Gas Price to Compare (also known as the Gas Cost Recovery rate) for March 2025 was $9.19/Mcf and it’s jumping even higher to $10.896/Mcf for April 2025. The rates in Duke have not been this high since January 2023.  

Factors impacting the natural gas markets currently

• Injection season officially started April 1st. Weather trends and natural gas pricing versus coal will determine how quickly and efficiently we are able to begin injecting gas for storage.
• Recent volatility has been attributed to uncertainties regarding tariffs on imported natural gas. This mainly concerns the natural gas we import from Canada. As it relates to the general economy, the immediate thought is that the tariffs could cause a rise in the cost of automobiles and daily goods, restricting consumer demand and slowing cargo flows. This would be bearish gas demand in the commercial industrial sector.

Action Advice

Due to the volatility, we recommend checking in frequently with your account manager for daily changes to the market and opportunities to lock in during sell-offs.

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.

April 2025 Natural Gas NYMEX Settlement Price: $3.950/MMBtu

Last month: March 2025 Natural Gas NYMEX Settlement Price: $3.906/MMBtu

Last year: April 2024 Natural Gas NYMEX Settlement Price: $1.575/MMBtu

Contact An Advisor ->

Petroleum & Refined Products

These 4-year refined products price charts showed significant strong price support at the multi-year lows. The April 9th low of $1.8788 RB and $1.9373 HO was a price washout coordinating to lows dating back to 2021 to within a penny for RBOB gasoline. The market rallied +15cpg off of these price levels, now indicating a near term bottom has been put in. Simply put, we feel this is a good risk reward price level heading into summer driving demand. The pause in tariffs excluding China in our view is a potential stop gap for lower prices. The market view from a few economists is that a recession has now been removed and is off the table. However, 125% tariffs overhang on China; the largest energy consumer in the world is not particularly bullish. Areas we are closely watching are the $55 level in WTI crude and yesterday’s multi year low in RBOB of $1.87 and $1.93. If there are any positive developments on trade with China and OPEC does not significantly increase production, we feel these lows will hold for the balance of the summer driving season.

Refined Product Margins and Recession Risks

• Despite a selloff in deferred crude prices, deferred refined product margins (e.g., for gasoline and diesel) have held up surprisingly well into 2026.
• A recession could disproportionately impact gasoline demand, as consumer driving habits typically contract during economic downturns.

Expect global oil demand dynamics projections to be further reduced.

Oil Market Dynamics

• Tariffs may slow global growth, reducing oil demand, while OPEC+’s supply increase exacerbates a soft market. Consensus forecasts 1 mb/d oil demand growth in 2025, but recessions historically flatten or reduce demand if trade deals are not made.

Financial Impacts

• Breakeven for US shale are ~$50 WTI, though some operators may cut activity at $60.

Action Advice

We never try to call a market bottom because we can’t predict the future. Tariffs could expand next month, or they could be resolved in the same time period. We suggest that our end user customers lock in if the current price aligns with or outperforms your budgeted cost of fuel