June was somewhat of a game-changer for the 2016 U.S. natural gas market. Summer weather finally arrived and U.S. consumption, particularly from power burn, was at record highs, as were exports to Mexico. Meanwhile, production volumes sagged, flattening and even declining versus year-ago levels in recent weeks. The market response to all of this was swift. The CME/NYMEX Henry Hub prompt futures contract ripped nearly $1.00 higher over the last five weeks to flirt with the $3.00/MMBtu mark. In fact, the U.S. natural gas market was behaving downright giddy — a bit like it the oversupply problem was ancient history. That is, until yesterday. On Tuesday the market returned from the long, holiday weekend to higher production, weaker temperature-adjusted demand and the likelihood of higher storage injections than previously expected. The resulting price action led the August contract to whipsaw back down more than 20 cents from Friday to a settle of $2.764.
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