Posted: August 21, 2026, 1:18 pm

Summer Reprieve

Day Ahead prices, of the markets we follow below, all looked like last week was a nice boring weather week. With the exception of some forced outages in SPP (we don’t follow) and some MISO alerts, it was fairly calm relative to what this summer has been.

We touched on this a few weeks ago, but are still puzzled by the divergence in the long term futures contracts of the different markets. While we were of the opinion that markets heading into last year were way too correlated and appeared to be complacent, we are a little surprised to see there has been no reversion to the mean in PJM and ERCOT especially as natural gas has traded lower throughout the summer (more below).

Natural Gas Market Commentary

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Natural gas futures continued to bounce back and forth in a sideways pattern over the past week, extending the trend that has been in place for most of the summer. Earlier in the week, it looked like the market was in store for a more substantial rebound, but mid-week revisions to temperature forecasts threw cold water on the mounting bullish sentiment and helped pull prices back into the recent range. Beyond the balance of summer, the path of least resistance still appears to point lower, as the Winter 2026-27 strip continues to inch to the downside and has been consistently weak relative to the front of the curve.

Inventory growth hit its likely summer low point during the week ended August 14, with a net build of 16 Bcf into underground storage. This was a rare week in which the surplus to the five-year average contracted and came amid the most significant heat of the summer across the southern tier of the country. Builds are expected to pick back up starting with next week’s report and beyond. Most importantly, inventories have weathered the peak of summer without taking any major hits and are still on track to end the season in great shape near 3.9 Tcf.

Elsewhere, domestic production remains strong and is holding near recent highs above 112 Bcf per day. If volumes continue to edge higher, it will take some of the sting out of the recovery in LNG export demand from its seasonal slump. With the shoulder season creeping closer by the day and most near-term fundamental drivers leaning bearish, it may take a major and unexpected development to shock pricing back to the upside. However, with an uncertain winter looming, a floor will likely remain under the market as well.