US natural gas prices have surged to the highest level for more than 18 months as stocks continue to build more slowly than normal despite the warm weather.
The price for gas delivered to Henry Hub in March 2017 has risen by 11% since the end of September and is up by almost 44% since hitting a low back in February.
The structure of futures prices has also shifted from a big contango to a small backwardation, with near-term contracts rising much further than prices for deferred deliveries.
Futures markets are sending an urgent signal to gas producers about the need for more drilling and to electric utilities to run gas-fired plants for fewer hours this winter to conserve stocks.
Gas stocks typically rise between April and October and then draw down between November and March.
But stocks have increased much more slowly than usual this year.
Stocks have risen by less than the five-year average every week since the start of May, a total of 23 consecutive weeks, according to data from the US Energy Information Administration.
The result is that the gas market has swung from a huge surplus at the end of the first quarter close to balance by the end of the third quarter and is on track for a deficit in 2017.
Stocks were 1,014bn cubic feet above prior-year levels in late March but by the end of the first week in October the surplus had shrunk to just 28bn cubic feet.
Gas production has been falling since April as low prices forced many gas companies to scale back drilling programmes.
The number of rigs targeting gas-rich formations fell to a low of just 81 in early August, down from 213 a year earlier, according to Baker Hughes.
At the same time, gas exports have risen to record levels this year both by pipeline and through newly built liquefied natural gas terminals.
And domestic consumption has increased sharply as power producers have burned record quantities of cheap gas.
A big part of the reason for the power burn this summer was the run of hot weather which saw temperatures consistently above normal from the end of May boosting demand for air conditioning.
Power producers have also installed an increasingly large fleet of gas-fired plants and have run them for more hours this year to take advantage of cheap gas at the expense of coal. The gas stocks have increased by less than in 2015 even allowing for demand driven by the unusually hot weather.
The market has continued to tighten, even as the summer cooling season ends and the winter heating season begins.
The run of warm weather continued through September and the first half of October sharply cutting heating demand for gas. Heating demand, as measured by population-weighted heating degree days, has been 46% lower than in 2015 and 63% below the long-term average.
The mild start to the heating season should have caused gas stocks to rise more than usual.
But instead they have continued to build by less than normal.
In the first week in October, stocks rose by just 79bn cubic feet, compared with a five-year seasonal average of 92bn cubic feet. Stocks are rising by much less than in 2015 even adjusting for the weather.
The continued tightening of the supply-demand balance despite a mild start to the heating season has sparked concerns about a potential deficit in 2017 unless production increases and consumption growth slows.
Futures prices for all maturities have risen sharply but the rally has been especially sharp for contracts expiring in the remainder of 2016 and the first half of 2017.
The market will rebalance again through a combination of more drilling, lower exports and reduced power burn from combined-cycle gas turbines (CCGTs).
In practice, the biggest short-term shift is likely to come through a moderation in exports and a reduction in the number of hours that CCGTs operate during the winter and in summer 2017.
CCGT utilisation rates have been trending upward and reached record levels during the first half of 2016 as power producers took advantage of cheap gas and reduced their use of coal-fired power stations.