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October gas moves below $3/MMBtu on storage improvement

Octobernatural gas futures crashed back through the psychologically important $3/MMBtumark Thursday, Sept. 22, giving back gains following the release of the lateststorage data from the U.S. Energy Information Administration that showed a larger-than-anticipatedbuild to stocks for the week to Sept. 16. The contract hit a $2.981/MMBtu lowand finished 6.7 cents lower at $2.990/MMBtu.

TheEIA storage reportfor the week to Sept. 16 outlined a build of 52 Bcf that brought total workinggas supply to 3,551 Bcf, or 140 Bcf above the year-ago level and 268 Bcf abovethe five-year average storage level of 3,283 Bcf.

Althoughthe injection was well below the 96-Bcf injection reported for the same week in2015 and the five-year average injection of 83 Bcf, the build was above theconsensus estimateformed at 49 Bcf.

Outlooksfor the more modest build were centered on weather, and the impact on demandfrom the above-average temperatures in key cooling regions including theNortheast and Midwest. Data showed, however, that Northeast natural gasinventories improved by 19 Bcf during the review week and the Midwest added 31Bcf of supply, quelling concerns that lingering warm weather in these majorcooling regions was significantly impacting the market's ability to augmentnatural gas inventories in preparation for the heating season.

Inthe six- to 10-day forecast from the National Oceanic and Atmospheric Administration,above-average temperatures are slated to continue across the eastern U.S.,stretching across the central U.S. and engulfing portions of the West.Above-average temperatures recede from the western portions of the U.S. whilethe eastern half of the country remains engulf by above-average temperatures inthe eight- to 14-day period.

Thearrival of fall means lower high temperatures in areas where above-averagetemperatures are slated to persist and should continue to trim power burn asair conditioners are switched off in favor of open windows, limitingpower-sector demand for natural gas to fuel power generators.

Lowerdemand should equate to weekly injections near or better than the last twoweekly injections of 62 Bcf and 52 Bcf that were clear improvement from thepaltry builds seen through most of the injection season. Storage remains ontrack to end the injection season at a record high of about 4,042 Bcf.

Naturalgas moved in the spot markets was priced lower amid futures' retreat and variedbut mostly lower load projections on moderating weather.

Inthe Northeast, Transco Zone 6 NY Friday product moved more than 30 cents loweron the day to an index around $1.15 and Tetco-M3 trades were 15 cents lower toa similar index. Henry Hub deals were marginally lower and averaged around$3.10. At the Waha hub, trades were about 5 cents lower to an index around$3.00, while Chicago trades were similarly lower to an index around $3.05. Inthe West, SoCal Border deals bucked the wider downtrend adding less than 1 centon the day to an index around $3.05, while PG&E Gate slipped less than 1cent to an index around $3.55.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storagedata, go to our Natural GasStorage Page.