Natural gas rebounds, but consolidation will likely continue for another few weeks.
Natural gas surged after the U.S. Energy Information Agency reported that operators injected 24 billion cubic feet into storage last week, below the 27 to 31 bcf that analysts were expecting. The figure was close to last year’s build of 25 bcf, but notably below the five-year average build of 44 bcf.
The inventory surplus compared with the year-ago level ticked down from 459 to 458 bcf (calculated using a slightly different methodology than the EIA), while the surplus compared with the five-year average fell from 417 to 397 bcf.
Price action in gas has largely followed our outlook, which called for range-bound action just below and above $3/mmbtu over August. We still anticipate that prices will climb above $3.50, even $4 after that.