Geopolitical risk premiums faded after the Israel-Iran ceasefire on June 23, removing war pricing across energy markets. This development stripped away support that had partially buffered natural gas prices, making the commodity more vulnerable to the oversupply narrative, especially as traders anticipated robust injections during the peak summer cooling season.
Can Record Heat Demand Override Bearish Storage?
Despite bearish headlines, a record-breaking heat wave across the eastern U.S. quietly underpinned natural gas demand. Boston hit 102°F on June 24, while heat indices spiked to 108°F across 25 states. Power generation demand surged, with gas-fired generation accounting for 44% of PJM’s output and ISO-New England demand hitting 25,898 MW, the highest since 2013.
Algonquin Citygate prices reflected the volatile response to weather-driven demand, spiking to $6.75/MMBtu midweek before falling sharply to $2.61/MMBtu. While futures ignored these spot spikes during the week’s decline, the weather-driven demand shock set the stage for Friday’s reversal.
How Did Technical Factors Trigger the Short Squeeze?