The following is a summary of last week’s market activity and the market outlook:
- Natural gas futures moved up again, despite a bearish natural gas storage report–and the late summer heat has definitely contributed to the rally. With additional price increases Monday morning, near-term natural gas futures are at their highs since late July, with the Prompt Month up 6 cents to $3.58 and the 12-month Strip up 7 cents to $3.85. Long-term prices however moved up only slightly, with Calendars ’14, ’15 and ’16 closing up 3 cents at $3.94, $4.14 and $4.27 respectively.
- Last week the EIA reported a 67 Bcf injection into storage, which was above expectations of 62 Bcf, above above last year (64 Bcf) and above the 5-year average (66 Bcf). This is the 22nd consecutive injection that has exceeded the same week last year. Current inventory through August 23 is 3,130 Bcf, which is 7.0% below last year and now 1.5% above the 5-year average.
- We are now entering the busy part of the hurricane season through mid-October. There are currently three systems being watched but none appear to be threats to the U.S. This is a sign of increased activity.
Despite recent warmer weather, near-term forecasts are still below 10-year normals therefore the duration of the near-term rally is somewhat surprising. Even with the rally, current prices are still a good value compared to historicals.