Natural gas prices, which were already on quite a roll the last couple of weeks, soared much higher to end last week, with the prompt month July contract moving all the way above the $3.30 level during Friday's session, before settling just shy of that mark. So far, this level is holding as we begin the new week.

Why such a surge in prices? There is no single answer, as it took what we are referring to as a "perfect storm" of factors to achieve. Thursday evening, we received news that TETCO pipeline flows would be limited perhaps all the way to late Q3, news which immediately spiked prices. Next up was word of a reclassification in West gas from PG&E, effectively lowering working gas in storage by 51 bcf. As if this was not enough, power burns also were revised considerably stronger, reaching strength on a weather-adjusted basis not seen for roughly three months.

Oh, and this is all before discussing the hotter weather pattern, which, while moving slightly cooler over the weekend, keeps us on pace for one of the highest demand Junes on record, per national Gas-Weighted Degree Days (GWDDs).

Notice that the bulk of the current 15-day forecast remains above normal, fueling the lofty GWDD totals.

With all of this in mind, it is no wonder prices have surged, with prompt month hitting levels not seen since the start of last November. We are reaching a time of year where prices typically flatline or decline, however.

This trend is more impressive when keeping in mind that the last 10 to 15 years have featured most of the hottest summers on record. That, of course, does not mean we follow the trend this year, but does tell us that price action in summer is definitely not led by weather, as is most often the case in winter. Fundamentals must cooperate, as well. Is the bullish news of late last week enough to keep prices running, or have we begun to "outkick the coverage", so to speak? We will be closely monitoring the data this week to see how this latest price surge shifts things, if at all.