Gas Price Rally Fades as Injections Collapse to 15 Bcf

Natural gas prices have reached their highest level in five weeks, holding at $2.91/MMBtu as of August's end. This increase comes after a 15 Bcf build against a seasonal average of 33 Bcf, which is a significant miss.

The market has been treating the surplus cushion as sufficient to absorb any injection shortfall, but this calculus changes if the pace persists into September. Two more sub-20 Bcf weeks against 40-plus Bcf averages would erase roughly 50 Bcf of surplus in a fortnight, and the surplus is the only thing keeping this market at $2.91.

The EIA still expects storage to end the injection season on October 31 at 7% above the prior five-year average, but its forecast was built on injection assumptions the last three weeks have not met. Nine weeks remain in the season.