Natural gas prices at Henry Hub rallied to $3.274/mmBtu on June 25, gaining $0.127 (4.0%) in a session where most other commodities declined. The strength was purely weather-driven: a heat dome settled over the US Southeast and Midwest, pushing temperatures above 95 degrees Fahrenheit across a region that accounts for 35% of US power demand.
Power burn — the volume of natural gas consumed for electricity generation — reached an estimated 42.1 billion cubic feet per day for the week ending June 20, up 8% week-over-week and 6% above the five-year seasonal average. The National Oceanic and Atmospheric Administration (NOAA) projects above-normal temperatures across 85% of the Lower 48 states through July 4, which should sustain elevated cooling demand.
Cooling degree days (CDDs) are running 15% above the 10-year average for late June. The intensity of the heat event is significant: it is a multi-day, multi-region event with high humidity, which drives elevated power consumption as air conditioning systems operate at maximum capacity. The Electric Reliability Council of Texas (ERCOT) has issued a weather watch, though no system emergencies are anticipated.
Storage injection estimates for the week ending June 20 are in the range of 71 Bcf, according to a Bloomberg survey of analysts. This would be below the five-year average injection of 82 Bcf for the same week, reflecting higher-than-normal power burn. Total working gas in storage is estimated at approximately 2,420 Bcf, which is 8% above the five-year average and 4% above year-ago levels.
The injection deficit relative to the seasonal average is the market's key concern. While total storage remains comfortable at 2,420 Bcf, a July heat wave that significantly reduces weekly injections could shift the narrative. The injection season typically runs through October, and the current trajectory would put end-of-season storage near 3,700 Bcf, above the 5-year average of 3,550 Bcf.
The prompt-month contract has moved to a small premium above the 12-month strip ($3.27 vs $3.22), indicating near-term tightness due to weather. However, the forward curve remains relatively flat, with calendar 2027 pricing at $3.35. This suggests the market views the heat wave as a short-lived event rather than a structural shift in gas market balances.
The rally is weather-driven and likely temporary. Current storage levels at 2,420 Bcf (8% above 5yr avg) provide a buffer against all but extreme weather. If you have natural gas price exposure, wait for the weather forecasts to turn before locking in volumes. The $3.00-$3.10 level before the heat wave is the fair value zone — expect a retreat toward that range once temperatures normalize.