The July natural gas contract has rolled off the board at $3.231 per million British thermal units, down from a week earlier, while the August contract rose $0.03 despite building record heat in the week up to July 4, EBW said in a note on Sunday.
Growing physical demand may result in upside for Henry Hub spot prices and, combined with supportive technicals, this may test resistance.
It could take extreme temperatures to raise prices higher, with recovering supply the most durable fundamental.
Iranian strikes in the Strait of Hormuz and the US retaliatory strikes that followed have ended bearish hopes for a quick restoration of oil transit through the waterway, the note said.
A longer-term softening of prices is the most likely scenario now, with expectations of a large oil surplus in 2027 although near-term upside remains possible.
Near-term weather may break record heat "outcomes" for the July 2-3 period, the note said.
Technical analysis suggests $3.39/MMBtu is possible.
Production has reached a 12-week high on upside in the Permian and Haynesville with pipeline readings often testing higher at the end of the calendar month.
Lower 48 storage is 152 billion cubic feet above five-year norms and production is robust, the note said, making it difficult for prices to go higher.
Power demand rose last week in central and western regions as temperatures rose.
Day-ahead peak prices rose across the Eastern Interconnect with PJM West rising $17 per megawatt-hour to $62.72/MWh while the ISO-NE rose $8/MWh to $58.79/MWh.
Spark spreads in PJM have already surpassed $40/MWh, notable further upside lies ahead with record heat coming for the Mid-Atlantic.
Power sector gas burns could improve by 4.2 Bcf/d week on week while the gas-heavy South Central and Southeast could have room to warm up later in the summer, the note said.