After yesterday's small decline, the entire natural gas strip recovered today, with the August contract settling up just less than half a percent. 

(Click on image to enlarge)

Yet it was later contracts along the strip that logged far larger gains, as the prompt August contract lagged especially into the settle. 

(Click on image to enlarge)

The result was a very significant move in the August/September Q/U spread, which moved markedly closer to flat. 

(Click on image to enlarge)

In our Note of the Day for subscribers yesterday we had warned that Q/U sat on the top of its historical range and short-term downside could be expected in the spread headed into expiry. 

(Click on image to enlarge)

This front spread move came even as later spreads, like the October/January V/F spread, were relatively flat on the day with rather uniform support all the way through March 2019. 

(Click on image to enlarge)

Weakness at the front of the strip is not particularly surprising either as we look for cooling demand to fall off into the end of July before rebounding in August (per our Morning Update). 

(Click on image to enlarge)

Still, this was a more unique move along the natural gas strip than we have seen recently, and was a significant focus in our Afternoon Update for clients today. Our Note of the Day today also provided a preview of Thursday's EIA data (with the latest DTI injection figure) and again looked at the latest weather-adjusted demand/power burns and production estimates, which we see similarly as playing a role in today's price action.