After a long string of EIA weekly storage reports that missed to the low side, this week the EIA announced a storage injection that was slightly larger than market expectations, quickly sending natural gas prices lower. The September contract settled down a bit over a percent on the day. 

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The Energy Information Administration announced that the natural gas market injected 33 bcf of gas into storage this past week, which was slightly more than our expectation of 31 bcf.  

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They also introduced some further uncertainty into the market by announcing new methodology for their weekly storage number which will be rolled out in early September and could revise previous summer expectations.  

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Most market estimates for today's print were in the upper 20 bcf range, however, explaining why prices quickly fell off the print release. In our Morning Update we outlined why we were still "Slightly Bearish" heading into the EIA print as "...we see little reason for prices to remain above $2.95. A print at or above our 31 bcf likely sends prices lower too, as risk still appears skewed slightly lower overall here".

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We had been warning clients all week about a potential bearish reaction to this EIA print as it appeared looser on a weather-adjusted basis to previous prints. 

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Every day we weather-adjust power burns and pass along our adjusted burns to subscribers, allowing them to see how the natural gas balance has changed day-over-day. We had noticed significant burn loosening early in the past gas week that made an upside miss more likely, as we highlighted in our EIA Rapid Release today. 

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Cash prices have remained strong on short-term heat, however, allowing the U/V September/October spread to still bounce a bit even with today's selling.  

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We also continue to track changing weather forecasts, which have played a significant role both with cash prices and futures at the front of the strip. In our Morning Update we noted GWDD losses which seemed responsible for some of the price declines even before the EIA print.  

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Traders now have a lot to consider heading into the weekend, as they must decide whether today's EIA print was a one-off reversion to the mean following a string of much tighter prints or whether the market has materially loosened. They must also weigh recent production levels against strong summer power burns and shifting medium and long-range forecasts. We break this all down in our Afternoon Update, where we outline our expectations for how forecasts change moving forward as well as what current natural gas supply/demand balance looks like and where price risk is skewed headed into next week.