Investing.com -- U.S. natural gas prices have been on a red-hot winning streak of late, powered by a bullish wave of increasing power demand and an easing glut in supplies.
"The more bullish scenario is starting to unfold with natural gas inventories moving toward average levels from a near 450 Bcf (billion cubic feet) surplus earlier this year," analysts at RBC Capital Markets said in a Thursday note.
Natural gas prices have racked up gains recently, inching closer to $3.00 per million British thermal units, or MMBtu.
The bullish backdrop for natural gas prices is starting to take shape, the analysts added, as inventories are "moving toward average levels from a near 450 Bcf surplus earlier this year."
The Energy Information Administration reported Thursday U.S. storage injection of 55 Bcf for the week ended Sept. 28, below consensus expectations of 59 Bcf.
Total working storage now stands at 3,547 Bcf, 127 Bcf higher than last year's 3,420 Bcf and 190 Bcf higher than the 5-year average of 3,357 Bcf.
Heading into the fall, RBC estimates that storage peak is likely to reach 3.9 trillion cubic feet, or Tcf, which is 150 Bcf above the 10-year average.
As well as falling inventory levels, strong power demand and visibility on LNG export increases represent further tailwinds for natural gas prices, the analysts said.
Weather forecasts estimate most of the U.S. will experience above-average temperatures, while the East Coast experiences a mild cold front, potentially boosting demand from both heating and cooling perspectives.
The bullish backdrop for natural gas prices has helped natural gas equities to rack up a 12% year-to-date, outperforming oil-focused equities, which are down 4%, the analysts said.
Natural gas stocks currently reflect a price of about $5.02/Mcf, well above the 5-year strip of $3.50/Mcf, they added.