Since Injection Season began April 1 the volume of natural gas going into storage has been below expectations.  U.S. consumption has been up bolstered by greater power demand.  The market is tightening and increasing the monthly futures price.

CME/NYMEX Henry Hub natural gas contract

Month

  Last

   Change

  Prior Settle

Updated

JUL 2016

  2.582

   +0.026

    2.556

14:00:28 CT
13 Jun 2016

AUG 2016

  2.689

   +0.065

    2.624

13:31:59 CT
13 Jun 2016

SEP 2016

  2.717

   +0.063

    2.654

13:31:59 CT
13 Jun 2016

OCT 2016

  2.745

   +0.023

    2.722

13:31:56 CT
13 Jun 2016

 

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Interesting article onSeeking Alpha:

-----------------------------
"Summary

Long-run equilibrium price should hover around $3.50/MMBtu.

Low cost natural gas producers will thrive.

While high cost producers will continue to struggle.

Natural gas prices continue its ascent upwards with a minor gain yesterday. Canadian gas (AECO) woke up from its slumber and rocketed 32.80% higher!"


David, hopefully we've seen the bottom of the price curve but the climb back up will be slow.  Who would have ever thought we would be encouraged by the prospect of $3.50.  As with oil, the question for natural gas operators is, how much will service and material costs rise as demand increases?  Right now numerous companies claim to make an acceptable profit at something over $2.75 but that's related to current rock bottom drilling costs.  Those discounts will not remain for long once companies resume drilling programs.

Natural Gas Prices Inch Up on Expected Summer Demand

Forecasts keep showing unseasonably warm temperatures stretching deeper into June

By Timothy Puko June 15, 2016 10:44 a.m. ET wsj.com

Natural gas inched up to nearly a new eight-month high Wednesday as warm weather forecasts keep stoking expectations for strong demand this summer.

Prices are now up in 10 of the last 13 sessions and have traded near intraday highs dating back to September in each of the last five sessions. Front-month prices have gained 33% since the June contract expired at just $1.963/mmBtu on May 26.

July’s contract hasn’t traded below $2/mmBtu since early March, and summer prices are often higher because of increasing demand for gas-fired power to run air conditioners. That has spurred much of the rally, along with slight declines in production and a record-low number of working rigs that has some traders expecting larger production declines on the way.

Natural gas for July delivery recently rose 1 cent, or 0.4%, to $2.614 a million British thermal units on the New York Mercantile Exchange. It traded as high as $2.629/mmBtu, 0.1 cent shy of the highest intraday price since late September.

Updates from both MDA Weather Services and Commodity Weather Group LLC--two widely watched private forecasters--keep showing unseasonably warm temperatures stretching deeper into June. More than half the country will be awash in temperatures 3 to 15 degrees Fahrenheit above normal by the last week of the month, according to MDA.

Longer-term forecasts show that pattern continuing through July, too, the London-based consultancy Energy Aspects said in a note Wednesday. Prices are likely to stay elevated in the spot market until those temperatures ease, it added. It forecast power-sector gas consumption during the two-week period ending July 1 to increase by 2.1 billion cubic feet a day compared to the same period from last year, averaging around 35.6 billion cubic feet a day.

“For the next few weeks (the gas market is) all going to be about weather and power,” said Richard Soultanian, co-president of energy-consulting firm NUS Consulting Group in New Jersey. “We’ve started the summer season off with a bang. It’s been really hot and humid.”

 

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