Geopolitical risks helped lift sentiment late in the week. Israeli military action against Iranian targets raised fears of broader regional instability, particularly around the Strait of Hormuz—a critical transit route for roughly 20% of global LNG flows. In response, Israel shut the Leviathan gas field, temporarily halting exports to Egypt. While no direct impact on U.S. LNG has materialized, the ripple effect lifted global gas prices and drew speculative interest into natural gas futures as a hedge against tightening global supply.
Could Late-June Heat Trigger Cooling Demand Spike?
Forecasters project a significant heatwave across the southern and central U.S. from June 19–26, with the potential to expand into the Southeast and East Coast. Temperatures are expected to push into the 90s and 100s, particularly across Texas and the Southwest, raising expectations for increased utility gas demand. This weather-driven demand boost could offer much-needed support to prices, provided forecasts verify. So far, the market remains cautious, with recent demand metrics still underwhelming and weather model consistency lacking.
Storage Surplus Highlights Soft Underlying Fundamentals
The latest EIA storage report showed a 109 Bcf injection for the week ending June 6—above both the five-year average of 87 Bcf and consensus estimates. This lifted total U.S. inventories 5.4% above seasonal norms, reinforcing concerns about oversupply heading into peak summer. Domestic production continues to outpace consumption, with output near 105 Bcf/day and electricity generation lagging year-over-year. These supply-side headwinds remain a key obstacle to any sustained bullish breakout.
Can Natural Gas Break Free from Its Weekly Range?