In the second half of August, the fundamentals leaned bearish, with strong natural gas production, limited weather-based demand, and liquefied natural gas (LNG) facilities not operating at full capacity. However, there are signs the downward price trend is coming to an end — or at least a pause. From a technical trading perspective, the momentum indicators on both the daily and weekly charts have turned higher as the market has started to meet some downside resistance.

Fig. 1-3 shows how both near- and long-term natural gas prices have traded over the past 6 months: You can see that the October 2025 contract has declined from $4.75 in March to $2.75 in early September. The 12-month average has seen the most downward movement during this 6-month trading period, while prices beyond October 2026 have remained relatively stable.

At prices below $3, demand begins to firm as natural gas becomes more economical over coal in the power stack. Similarly, persistent low prices could prompt producer curtailments or adjustments to drilling activity, which tightens the supply side of the equation and can push prices upward.

Summer 2025 started strong with multiple hot weather alerts and emergency conditions in PJM throughout June and July, but the power market has cooled off more recently, with only one additional hot weather alert on August 17. In August, PJM power demand came in 2.6% lower on average than the year prior and had a lower peak than August 2024. This is due, in part, to milder weather year over year. Even with lower demand, hourly LMPs (locational marginal prices) for the month averaged 5% higher. While this might seem counterintuitive, one likely contributing factor to the upward price movement is that wind generation was down slightly on average, which can cause increased fuel costs at power plants.

An unusually cool final week of August across the eastern two-thirds of the country helped drop average temperatures for the month. This marks the coolest August nationally since 2017 and the coolest in the eastern Energy Information Administration (EIA) region since 2004.

Overall, summer 2025 finished as the ninth hottest since 1950 based on power-weighted cooling degree days (CDDs), just slightly cooler than the 10-year normal. Actual temperatures were fairly consistent with forecasts heading into the season. This year continues the trend of summers coming in hotter than the 30-year normal.

Cooler pattern changes from late August have persisted into early September and are forecasted to hang around for the first half of the month. More seasonable to slightly above-normal temperatures may return for the second half of September, but the cooler start may be enough to push temperatures slightly below normal in parts of the East for the month overall.

Forecasters have started to share early winter forecasts — many forecasting slightly above-normal temperatures in parts of the East, with a transition to slightly below-normal temperatures in the Pacific Northwest. Confidence overall is lower than normal for the lead time given more neutral conditions in the El Niño-Southern Oscillation (ENSO) region.