At the onset of the summer, predictions of potentially sweltering heat had some analysts thinking natural gas could stage a new rally.
What a difference a few months can make.
Thanks to milder-than-expected temperatures, Henry Hub natural gas is now closer to $3 than the levels above $6 that sent utility bills soaring at the height of a frigid winter. In the last six weeks alone, Henry Hub prices, traded on the NYMEX, have plunged by about 20 percent.
"Looking back, we find the month of July has been the coldest since 2009 and much colder than the past four summers, which were also unusually warm," noted analysts at Bank of America-Merrill Lynch, in recent research.
"As a result, U.S. natural gas demand has been 1.4 billion cubic feet (bcf) per day lower relative to the seasonal average for July," the bank wrote. "This surplus gas has, of course, moved into storage, softening market balances for next winter."
Also helping is that the U.S.'s most prolific shale formations, Pennsylvania's Marcellus—by far the largest shale gas hub in the U.S. boom—Ohio's Utica Shale and Texas' Eagle Ford, continue to churn out large volumes of natural gas. Bank of America expects Marcellus and Utica production to expand well into 2015.