Natural Gas: Current Fundamentals &What’s Next

Right now, natural gas storage levels remain above the five-year average, and U.S. production has been consistently strong through 2025. These factors have kept wholesale gas prices somewhat tempered in the near-term. However, the fundamentals point toward tightening balance going into winter. LNG exports continue to grow, and pipeline projects in the Gulf and Appalachia are set to increase outflows in 2026.

Key Drivers to Watch:

• Winter weather – colder-than-normal spells could flip the supply/demand balance quickly.
• LNG export growth – projected to rise another 3–4 Bcf/day in 2026, competing directly with domestic demand.
• Pipeline tariffs – ongoing FERC cases (TC Energy, Texas Eastern, etc.) will influence delivered costs.

The bottom line: today’s “bearish” tone may not last. Forward curves for 2026 already show stronger pricing. Locking in at market dips continues to be a smart move.

Electricity: Fundamentals & Price Trends

Wholesale power prices are being shaped by both natural gas fundamentals and the pace of new generation projects. Near-term prices in PJM are benefiting from mild weather and strong gas production, but medium-term outlooks (2026–2029) reflect higher structural costs driven by:

• Rising PJM capacity charges
• Retirement of coal and older gas plants
• Buildout delays for new gas, solar, wind, and storage

Short-term(next 6–12 months): Some relief possible on day-ahead and real-time markets during mild weather.

Medium-term(2026–2028): Upward pressure as demand grows faster than supply.

Long-term(2029+): Higher price environment unless storage, renewables, and transmission catch up.

AI Data Center Demand: Real or Overblown?

There’s no question AI is reshaping demand forecasts. PJM has thousands of MW of “datacenter” load sitting in interconnection queues. The debate is how much of that is real demand versus “phantom” demand – projects applying in multiple locations to see who builds first.

Even if only a portion comes online, it represents one of the fastest-growing demand categories in PJM history. The real challenge is timing: can new gas, renewable, and storage projects be built fast enough to match it? Most signs point to a gap in the late 2020s.

For Ohio businesses, this means PJM wholesale prices are likely to remain elevated, with more Demand Response events and grid stress during summer and winter peaks.

PJM Capacity Prices: Any Relief in Sight?

Unfortunately, relief on PJM capacity auction prices is unlikely in the near term.

• The most recent Base Residual Auction cleared far above historical averages.
• Forward auctions through 2027–2028 show high clearing prices as new supply lags new demand.
• Only when significant new generation and storage projects reach commercial operation – likely late this decade – will we see downward pressure.

Until then, capacity costs will remain a major component of business power bills.

What This Means for Your Business

• Act strategically, not reactively – shop when wholesale markets soften, not when they spike.
• Plan for higher capacity costs – build them into budgets and explore Demand Response opportunities.
• Stay proactive on natural gas – consider fixing portions of load before winter and before LNG growth pressures 2026 prices.

Lean on RD Energy – our expertise and supplier portfolio help Ohio businesses secure the lowest available prices and long-term strategies.