Temperatures are mild, and storage inventories continue to swell, but a surprise increase in the U.S. Energy Information Administration’s 2016 price forecast was enough to boost natural gas forward markets between May 6 and 12, according to NGI’s Forward Look.

The Nymex June contract climbed 5.5 cents during that time, with the bulk of that gain occurring May 10, the day EIA released its latest price forecast.

EIA said forecast Henry Hub prices will average $2.25/MMBtu this year, up 7 cents from the agency's previous forecast. It was the first time EIA has increased its 2016 forecast in nearly a year.

The front half of the curve posted similar increases, with the Nymex July contract climbing 5.6 cents and the balance of summer (July-October) edging up 4.9 cents.

Other gas markets generally followed suit, climbing an average 3.5 cents for June, 4.5 cents for July and 4.4 cents for the balance of summer, according to Forward Look.

The overall strength in natural gas markets occurred as storage inventories grew by another 56 Bcf for the week ending May 6.

The slightly smaller-than-expected build ideally should have given natural gas markets another boost, especially when comparing the 56 Bcf build to historical figures, but the market instead settled slightly lower on the day.

And analysts see a lot more downside risk to prices in the near term as prices do not appear quite low enough to swing enough power generation to clear out excess inventory.

Stocks currently are 816 Bcf higher than last year at this time and 813 Bcf above the five-year average of 1,868 Bcf.

“Last three weeks of data have been disappointing as market has been roughly balanced on a weather-adjusted basis versus the 3 Bcf/d of undersupply necessary to clear storage,” analysts at investment bank Tudor, Pickering, Holt & Co. said on May 9, before the most recent storage report was released.

“Not concerning yet, but if the market doesn’t return to 3 Bcf/d undersupplied soon, there is an increasing risk of a late-season collapse in gas prices as storage moves towards capacity,” the analysts said.

Andrea Patrinieri, an analyst at NatGasWeather, agreed that while the storage build was tighter week on week, it wasn’t tight enough to prevent reaching 4 Tcf at the end of the season.

Moreover, the salt region is filling caverns at a high injection rate, with inventories there at 368 Bcf, a value not reached last year until the end of October, Patrinieri said.

“Since most trade Henry Hub, I suspect sooner or later the market will consider this factor more strongly,” he said.

There are, however, some indications the market will continue to tighten over the remainder of the summer.

For example, U.S. demand has been averaging about 2.4 Bcf/d higher on a weather-adjusted basis than the same period in 2015, according a recent blog by RBN Energy natural gas analyst Sheetal Nasta.

“If that is any indication of potential demand in the coming months, record demand is a given this summer, assuming normal weather,” Nasta said.

It would also take considerably milder weather to fully offset the temperature-adjusted demand growth, she added.

“Incidentally, the growth in temperature-adjusted demand is not only bullish for this summer but implies that, if sustained, it would take only normal weather next winter to significantly tighten the supply/demand balance,” Nasta said.

Meanwhile, Mexican exports and LNG exports also are expected to provide support to prices this summer.

“Exports to Mexico this April have averaged 3.4 Bcf/d, up about 1.0 Bcf/d from April 2015. That is a big increase,” Nasta said.

“And as for LNG exports, feed gas deliveries to Cheniere’s Sabine Pass liquefied natural gas (LNG) export terminal averaged over 0.5 Bcf/d in April, which represents incremental demand that didn’t exist last year,” she added.

Still, Nasta said a combination of all possible bullish factors on the demand side would need to show up this summer in order to bring the storage surplus into a manageable range and save the market from severe congestion in the fall.

“Short of that, the supply side will have to respond (i.e. lower production). And as we’ve said before, the only thing that can force that is lower prices,” she said.

Still, some storage fields are showing clear signs of a tighter market.

Dominion and Columbia Gas (TCO) storage fields have posted a second week-over-week injection decline since inventories first started to build during the 17th week of the year. Dominion posted a 5 Bcf injection for the week ending May 5, a decline of 1 Bcf from the prior week and down 2 Bcf from the first injection, according to Bentek Energy.

This effectively shrunk the surplus to the five-year average to just 8.4 Bcf, a dramatic reduction from the peak of 34.8 Bcf during the last week of December 2015.

Meanwhile, TCO implied injections were 4.5 Bcf for the week ending May 6, a reduction of 1.8 Bcf from the previous week and 2.7 Bcf from the first injection, Bentek said.

While TCO has a larger surplus to the five-year average at 18 Bcf, relative to Dominion's, the weak activity during the change of seasons has reduced the mark by nearly half, from a high of 33.4 Bcf on March 25.

TCO has injected a total of 18 Bcf this summer, nearly half as much as last year's 32 Bcf and the five-year average of 29 Bcf. Dominion has also injected 18 Bcf this season, down by nearly 13 Bcf from both last year and the five-year average, the company said.