The rally in natural gas prices, which posted a 3.9% gain for the month of August, took a breather of Friday, but prices are rising, again, this morning. Prices continue to rise on some of the late-season warmth that is being experienced and despite rising domestic output. According to the latest production report from the EIA, production is 2% higher, year-on-year, and 2013 is set to be another record output year. Inventories, however, remain 7% below last year’s record levels, but are 1.5% above the five-year average. Storm activity is on the rise, but no immediate threats to the Gulf are on the horizon. Some further warming or increased cooling demand is being seen in some of the weather models, and there were some nuclear outages that have lent support to prices, as well. We have spoken of the bullish narrative that surrounds this market, due to the hopes for LNG exports and the increasing environmental push against coal. The turn of the calendar, while pushing us into the second shoulder season, also reminds market participants of the coming of winter. It has been a steady climb higher, and the market seems more willing to follow-through than pullback. We will have our injection estimate for Thursday in tomorrow’s report.
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