Back in the June 16th we talked about the peculiar action transpiring in the Nymex Henry Hub back spreads. For instance, in between May 06th and June 15th, the backwardation for the key cross-seasonal March 2011/April 2011 spread spiked by 204%. Recall, this was the purported trade that drove a $9 billion hedge fund (Amaranth) into extinction.

We thought this price path a bit strange in light of the fact supplies were (and still are) getting stuffed into the ground at a comfortable pace. For instance, per the latest monthly numbers from the EIA, at the start of the refill season in April, the net amount of gas injected and added (underground and LNG storage) than withdrawn, was the largest differential since records began in 1973.