Please visit the Direct Energy Business online customer education center, Energy Insights, to view my Weekly Energy Market Update video for July 1, 2013. Receive weekly updates that are sent right to your email inbox.

The following is a summary of last week’s market activity and the market outlook:

• Natural gas fell hard last week, ending at its lowest level since March 6. Despite pockets of extreme heat, close-to-normal June weather resulted in less demand, compared to the extreme heat of a year ago. In addition, the EIA storage report last Thursday was another bearish surprise that contributed to the declines.
• Last week the EIA reported an injection of 95 Bcf, which was well above expectations, and above last year and the 5-year average. We’ve now seen 12 consecutive injections that have exceeded last year by an average of 32 Bcf/week. Current inventory through June 21 is 2,533 Bcf, which is 522 Bcf(17.1%) less than last year and 31 Bcf (1.2%) below the 5-year average.
• At 64.8 Bcf/day, natural gas production is up 2.0 Bcf/day versus a year ago and is close to its peak from November 2012. Demand is picking up but remains significantly below last year, as evidenced by large storage injections. Demand growth is increasing due to industrial demand, LNG exports and coal retirements, which will all contribute to increased demand as we approach 2016.
• The summer dip seems to be coming early, thanks to strong supply, mild temperatures and large storage injections. While more downside is always possible, price support should eventually come if sustained lower prices stimulate demand (coal-to-gas switching) and suppress supply(shale drilling cutbacks).