The Energy Information Administration announced this morning that the natural gas implied flow for the week ending July 15th was +34 bcf, under our estimate of +39 bcf and under most market estimates from 35-43 bcf. The result was initially to support natural gas prices, which then bounced around through the day. The number came in significantly below the 5-year average, but was still above the same print for the week in 2012, another year with a massive gas glut. 

The result is that the natural gas strip rallied through the day. The September and October contracts rose slightly more than the rest on a small easing in supply concerns, with the prompt month August contract rallying. The winter contracts changed less, however, as traders still were concerned about the massive supply overhang heading into winter. 

For this reason, over the past week we still have logged declines along the natural gas strip, with the prompt month August contract seeing the fewest declines thanks to near-term hot weather. 

When looking at the August contract specifically, it is hard to make all too bullish of a case heading into the weekend, as prices were unable to close above the $2.70 support level despite the bullish reversal candle today. 

(Click on image to enlarge)

Without significant movement in the winter contracts, it will be hard to get much movement at the front-end of the strip. This is part of the reason that even prompt month prices have not been moving much, as higher cash prices have helped support the prompt month while later contracts declined further, throwing the market into backwardation. Because of this we are giving as much attention to the January F7 contract as to the front couple months as to the next move, and we have seen that contract gradually decline over the last couple weeks. 

Today, the bullish EIA data miss helped prices at least stabilize along the strip, with the winter strip rising by about half a percent. The real struggle now will be getting a pronounced move higher. For that, we may need to await signs of further production slowdowns.