Despite the late-session recoveries, nearby pricing remains under pressure following this week’s sharp decline. October is down $0.14 from last Friday, while Winter 2026-27 has lost $0.05. For now, the ability to hold the recent lows has slowed the downside momentum, but the prompt month remains firmly below the $3.00 level that capped last week’s rally. With weather-related demand expected to slide over the coming weeks and domestic production holding near record levels, near-term fundamental market support will likely continue to dwindle.

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Today’s natural gas storage report showed a larger-than-expected build into underground inventories, with the reported 40 Bcf addition exceeding the average expectation of 28 Bcf as reported by the Wall Street Journal’s survey. When adjusting for weather, today’s storage build registered as the loosest since the week ending July 10 suggesting the heat-induced tightening of the supply/demand balance may be easing.

Looking ahead, weather will likely play a reduced role as a price driver as September progresses and temperatures moderate. That is, until the market begins to look ahead to winter and the potential for residential and commercial heating demand.

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Storage injections continued to lag historical benchmarks last week, according to this morning’s EIA report, which showed a 40-Bcf build into natural gas inventories. The build fell shy of the 52-Bcf five-year average and the 69-Bcf addition during the same week in 2025. This marked the fourth consecutive report in which the net storage addition lagged both benchmarks. Despite the stretch of relatively slow storage growth, inventories remain on a healthy trajectory heading into the fall shoulder season.

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Temperature patterns are set to normalize considerably from here. Beyond today, population-weighted cooling degree days fall off and are poised to trend lower into the shoulder season.

While natural gas demand from the power generation sector has remained elevated in recent weeks, volumes should ease through the balance of September. On the other side of the coin, LNG feedgas has continued to edge higher, with estimated volumes approaching 20 Bcf per day. With Golden Pass and Corpus Christi Stage 3 now operational, the stage is set for new all-time highs in LNG export demand this fall.

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Near-term weather support continues to fade as the recent stretch of widespread heat begins to ease, reducing some of the pressure on power generation demand. Even so, recent storage builds have remained relatively light, narrowing the surplus to the five-year average and keeping the market from fully dismissing tightening fundamentals. With production still strong and inventories in healthy shape overall, the near-term balance remains mixed.

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• Natural gas futures were mixed last week, with the October 2026 NYMEX contract gaining $0.09 to $2.98 per MMBtu. Winter 2026–27 was unchanged at $3.40, while Summer 2027 slipped $0.02 to $3.04.

• The EIA reported a 30-Bcf storage build, lifting inventories to 3,214 Bcf. Stocks are now 50 Bcf below year-ago levels but remain 160 Bcf above the five-year average.

• Widespread heat drove elevated power loads early in the week, although demand faded as the week progressed. Gas-fired generation came in 6.5 Bcf per day above last year.

• Real-time power pricing increased sharply in PJM and MISO, while ERCOT and CAISO retreated from the elevated levels seen the previous week.

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Widespread heat has kept power generation demand propped up into early September, with volumes remaining close to 50 Bcf per day and well above year-ago levels. This is working to stunt storage growth during a period when injections are typically more robust. Temperature forecasts show warmer-than-normal anomalies persisting through at least mid-month, but the intensity of the heat in most markets should subside from here, allowing gas consumption to begin relaxing.

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The EIA reported a 30-Bcf storage injection this morning, roughly in line with market expectations but below both last year and the five-year average for a third consecutive week. Recent heat has slowed storage growth and narrowed the surplus to the five-year average to 160 Bcf, while inventories now trail 2025 by 50 Bcf. This week’s widespread heat should keep next Thursday’s build relatively small, although cooling demand is likely to decline more meaningfully beyond the first week of September as normal temperatures begin their seasonal descent.

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This morning’s announced 30-Bcf injection came in about as expected from the market, but it was the third consecutive weekly build to fall shy of both last year and the five-year average for the same week. As a result, the surplus to the five-year average has declined from 198 Bcf to 160 Bcf, while the deficit to 2025 widened from 12 Bcf as of July 31 to 50 Bcf. Over that stretch, storage growth has been stunted by consistent warmer-than-normal conditions across the South Central leading to outsized drawdowns from Salt storage. Mountain and Pacific stocks also posted net declines throughout August.

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Today’s gains were posted as the market anticipates another smaller-than-average storage build in tomorrow’s EIA report. A survey by The Wall Street Journal showed consensus forecasts near 29 Bcf, with responses ranging from 22 to 39 Bcf. If the consensus is realized, it would shave 8 Bcf off the surplus to the five-year average and add 21 Bcf to the deficit versus 2025 levels. With heat lingering through at least the first week of September, subsequent reports could also show relatively small builds.

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Near-term heat remains the main source of support for the market, with widespread above-normal temperatures expected over the next several days. That should keep power-generation demand elevated and limit storage injections in the near term, but the impact has so far been mostly confined to the front of the curve. With production still running at strong levels and inventories in generally healthy shape, the market continues to show little urgency beyond the immediate weather window.

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With elevated power burn likely to stick around through at least this week, the market remains well supported. Storage injections for the week ended Friday, August 28, and the week ending September 4 are both projected to be relatively light, which could chip away at end-of-season storage expectations. However, with production back near record levels and weather-related demand set to fall off in the coming weeks, the market is not pricing in much lasting impact from the current stretch of heat.

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• Natural gas futures firmed last week, led by the front of the curve. The newly prompt October 2026 NYMEX contract gained $0.08 to $2.89 per MMBtu, while Winter 2026–27 added $0.04 to $3.40.

• The EIA reported a 15-Bcf storage build, lifting inventories to 3,184 Bcf. The surplus to the five-year average narrowed to 167 Bcf, while stocks remain 30 Bcf below year-ago levels.

• Another round of widespread heat is expected to start September, with the strong anomalies expanding into the Midwest and East.

• ERCOT and CAISO load remained firm, supporting the highest real-time pricing of the summer in both markets. PJM could face a coincident-peak event as heat ramps up early this week.

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The natural gas market remains choppy, with recent strength concentrated at the front of the curve as lingering southern heat and another widespread heat wave support near-term demand. Despite two relatively small storage builds, inventories remain healthy overall, with much of the recent tightening driven by South Central salt-storage draws rather than broad-based weakness. Production has climbed back near record levels, LNG feedgas is recovering above 19 Bcf/d, and power burn has strengthened in August, but winter pricing remains near multi-year lows, suggesting the market still views the current heat as a near-term issue rather than a major threat to winter supply.

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Traders are bracing for a round of significant heat in the coming days. With hot weather still lingering across the South, key population centers in the Midwest and East are expected to see major heat return next week. Population-weighted cooling degree days will be elevated but are expected to remain short of levels experienced earlier in the summer. With normal temperatures beginning to fall quickly at this point in the season, it will take extreme anomalies to drive outsized energy demand as the calendar rolls deeper into September.

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The market was elevated prior to this morning’s EIA storage report that showed a build of 15 Bcf. Even though the injection came up shy of consensus market expectations and lagged historical benchmarks, trading activity in the wake of the report pushed prices lower. With what is likely the last major heat wave of the summer on tap for next week, nearby pricing remains well supported amid elevated cooling load. However, inventories are still sitting at healthy levels and domestic production is showing signs of growth, preventing bullish momentum from spreading into the upcoming winter.

An archive of Daily Natural Gas Market Notes can be found here.

The 15-Bcf net storage build reported this morning by the EIA marked the second straight injection to lag both last year and the five-year average, widening the year-over-year deficit while narrowing the surplus to the five-year benchmark. A 20-Bcf draw from Salt storage in the South Central was the primary driver behind the small overall addition. Inventories were little changed across the Mountain and Pacific regions, while the East and Midwest posted sizable builds. Despite another light injection, inventories remain in healthy shape heading into the next stretch of the injection season.

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Lingering cooling demand has helped support September futures, with another round of above-normal temperatures expected across much of the country early next week. Power generation demand, which lagged year-ago levels through much of June and July, has strengthened so far in August, with month-to-date volumes now running above 2025 levels.

Tomorrow’s storage report is expected to show a build near 21 Bcf, according to a Wall Street Journal survey of analysts. Estimates ranged from 11 to 32 Bcf, reflecting a relatively wide range of expectations heading into the report. If the consensus is realized, the surplus to the five-year average would narrow while inventories would move modestly closer to year-ago levels.

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There are now just two trading days remaining before the September contract expires, which could introduce some additional volatility at the front of the curve as positions are rolled or closed out. Beyond the expiration noise, however, the broader fundamental backdrop remains relatively soft, and winter pricing continues to carry most of the recent downside momentum as the market approaches the fall shoulder season.

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The fundamental backdrop has not changed enough to provide the market with a clear catalyst in either direction. Late-summer weather remains relatively tame across much of the country outside of the persistent heat across Texas and portions of the South, limiting the potential for a meaningful increase in weather-driven demand. At the same time, healthy storage inventories continue to provide a cushion heading toward the fall shoulder season. With the market still balancing that comfortable near-term setup against stronger LNG demand expected later this year, prices remain stuck in the relatively narrow range that has characterized much of the summer.

An archive of Daily Natural Gas Market Notes can be found here.