Despite the Autumn shoulder season being in full force, natural gas prices have been continuing their rise, with prompt month prices up 34 cents, or 12%, to yesterday's close at $3.24 per MMBtu since September 19. We've blown past important technical resistance at $3.19 and $3.23. These are the highest prices since the end of January.
The start of the rise up was really triggered by forecasts that showed a potential cold outbreak in the high demand regions of the East and Midwest to start this month. This hasn't exactly materialized: it's gas used for electricity that's up 17% over the past week, with Residential/Commercial demand declining.
With winter just five or so weeks away, the market is realizing that we will go into winter with the lowest gas storage since 2003, perhaps just 3.25 trillion cubic feet, well below the 3.8 Tcf that we saw last year. The rise up was to be expected since such low storage numbers yet still low pricing made clear that gas has been a greatly undervalued commodity.
U.S. gas production continues to hit record highs, now at nearly 84 Bcf/d, versus 75 Bcf/d this time last year. Rising production could be the additional supply needed to compensate for a lack of gas in inventories.

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