Natural gas prices wound up moving lower this week, closing about a nickel under last Friday's close, though we did see some of our usual volatility, as prices tested the 2.25 level in the September contract earlier in the week before sellers stepped in. The contract finished the week just over the 2.15 level. 

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As usual, there were multiple forces at work. On the bearish side of the spectrum, we saw new all-time highs hit in natural gas production this week. 

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We also saw cooler weather forecast changes for the final third of August into the first few days of September, with blue colors making a return to our forecast maps. 

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On the bullish side, LNG returned to much higher levels this week, with maintenance on LNG facilities coming to a completion. 

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We also heard earlier in the week that exports to Mexico could increase as early as next week, as the Sur de Texas pipeline begins service. 

Yesterday's EIA report came and went, and was mostly neutral, with the reported build coming in at 59 bcf for the week ending 8/16, almost dead-on our estimate of 58 bcf. In our view, that was not a complete rejection of the bullish EIA report last week but was a little looser week over week, and still loose when looking at the same gas week in previous years. 

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Of course, a lot of the "looseness" was still due to low LNG intake for the week, which brings us to the question, what do we see next in the world of natural gas? 

The return of LNG should help supply/demand balances tighten from here, but does production continue to make new highs to negate some of that impact? On the weather side, yes, it is September, so it is more difficult for the weather to move the needle as much, but we are seeing some turning back upward in the forecast demand charts at the end of the 15 day period. 

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