After trading solidly lower much of the morning the June natural gas contract stabilized off an in-line EIA print and proceeded to rally through the rest of the day, closing up around a percent and a half at the top of the recent range.
Yet today's rally was not prompt-led but instead led by the second July contract followed up the August contract. The winter strip still lagged on the day, but it was clearly a summer-led rally.
The result was even further widening of the M/N June/July natural gas spread.
All this came after an EIA print that was not particularly surprising. In fact, it hit our estimate perfectly on the day.
Additionally, weather did not appear particularly inspiring for bulls today, with our Morning Update showing only a small tick up in forecast GWDDs through the next 15 days.
The in-line EIA print came in solidly above the 5-year average at +106 bcf, which on face value would not be supportive either.
However, we are looking for a smaller injection to be announced next Thursday, thanks in part to heat that was quite impressive earlier this week.
We have been tracking weather-adjusted burns over the past week with the arrival of heat and alerting subscribers as to how observed burns have jived with our expectations for short-term weather. We continue to track longer-term weather trends as well, using our GWDD expectations to forecast future EIA prints and look at price risk further out in the future.
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