Natural gas prices began June swinging upward only to reverse course by mid-month and settle back toward the current $4.40 per MMBtu range. Early June also saw strong demand for gas in the power sector and lower-than-average net gas injections into storage, both of which are important near-term influences that markets recognize. As the month wanes, power demand has dropped, and net injections into storage have risen with volumes nearing triple-digit levels last week.
The possibility of spikes in temperature driving gas to power generation and the prospect of supply disruptions due to hurricanes this season could play a role in shaping markets over the coming months. Yet, amidst these possibilities, continued strong domestic gas production underlies what appears to be an optimistic market sentiment of relative price stability as reflected on the NYMEX futures strip. Contracts remain below $5 per MMBtu for all months through November of 2012.
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