Summer heat waves across Texas, the Southeast, and the Southwest drove natural gas power burn to 42.5 billion cubic feet per day in the week ending June 19, 11% above the five-year average for this period. The elevated power burn is providing demand support but has not been enough to tighten the market.
The power sector's increased gas consumption is offset by the large storage surplus. With working gas inventories at 2,845 Bcf (12% above the five-year average), the market can absorb increased demand without creating supply tightness. Injection season is progressing at a slower pace than last year, but from a higher starting point.
Production remains steady at approximately 104 Bcf/d. The Permian Basin continues to produce growing volumes of associated gas as crude oil production expands, with new gas processing plants in the Permian adding 1.2 Bcf/d of capacity in Q2 2026. This associated gas is largely price-insensitive, flowing regardless of gas prices.
Weather forecasts show continued above-normal temperatures across the southern half of the U.S. through early July, which should keep power burn elevated. However, without a production decline or a more dramatic heat event, the current supply-demand balance does not support a rally above $3.50.
The elevated power burn highlights seasonal demand but the structural supply surplus (storage + Permian associated gas) keeps prices capped. For procurement teams, this is a favorable environment for locking in summer baseload. The $3.00-$3.25 range is unlikely to break significantly in either direction without a supply disruption or extreme weather event. Buy at $3.00, wait below $3.25.