California gas markets have defied the historical norm this year by struggling to price above Henry Hub despite long stretches of extreme heat. Important aspects of these markets taken for granted in years past have shifted or failed to materialize this summer. Most importantly, demand has underdelivered and storage is filled to the brim. In this article we will walk through the key shifts in market behavior and the nitty gritty details of those fundamentals driving the change. Now is an especially important time to revise assumptions about this market as a fresh batch of heat is headed for California come September and the summer to date has given us some important clues to how it may play out.

Figure 1 | Summer California Spot NG Basis Spread (Rolling Average)