Last Week in Natural Gas
The front month ground higher all week, closing Friday near an 8-week high and up roughly 3% as tight early-September fundamentals overpowered the shoulder-season narrative. The driver was storage: last Thursday’s EIA release, covering the week ending August 28, printed a lean build near +25 Bcf against a five-year average closer to +37 — a genuinely tight number that reset the front’s floor. Layered on top was a relentless export pull, with U.S. LNG feedgas running near facility capacity and Golden Pass trains still commissioning, while a firm European bid — TTF holding in the low-$70s — kept the netback supportive. Late-summer heat lingering across much of the Lower 48 held cooling demand up longer than the calendar suggested. The offset stayed intact: the curve carried a healthy contango, with November already stacking early-winter premium into a Dec–Jan strip that peaks near $3.90. NOAA’s ONI sat at +1.39 and climbing toward +1.8, confirming a Super El Niño building toward record strength — a warm-winter signal the market is only beginning to price.
The Week Ahead
Thursday’s EIA release, covering the week ending September 4, is the week’s anchor. Consensus clusters in the mid-to-upper-20s Bcf — another tight print well beneath the roughly 50 Bcf five-year norm — which would extend the early-September firmness that carried the front to its recent high. The tell is what comes after: injection estimates loosen hard into late September, with builds projected to cross back above the five-year average and an overhang stacking through early October. Fade rallies into that shoulder softening while respecting the export floor, which is still rising as feedgas climbs toward capacity. On weather, watch whether late-summer heat holds or the pattern breaks cool into mid-month; a quiet, El Niño-sheared tropical basin keeps the Gulf storm bid off the table. Further out, the tension is unchanged — a Dec–Jan strip near $3.90 sits against an OND El Niño forecast pushing toward record intensity and a heavy end-October storage carry-in. That premium looks rich absent a sustained cold signal, though a live polar-vortex tail keeps anyone from leaning too hard.
In Plain English
Natural gas prices firmed up last week, closing at their highest level in about two months. The reason: the amount of gas being added to storage came in lighter than usual for this time of year, and record volumes are being shipped overseas as exports, which tightens supply at home. Looking ahead, forecasters expect this winter to run milder than normal because of a strong El Niño — a Pacific Ocean warming pattern that tends to soften U.S. heating demand. That’s why prices for winter delivery, while higher, may be priced too optimistically. The near-term picture is firm, but the winter outlook leans softer unless real cold arrives.