Natural gas prices are approaching a 14-week high, driven by a combination of supply and demand factors that are beginning to trim the storage surplus.

According to RBC Capital Markets strategists, the latest bullish storage data shows a 79 billion cubic feet (Bcf) injection, which is less than the consensus median expectation of 87 Bcf. This injection figure is also below the five-year average of 81 Bcf, signaling that the supply-demand balance is tightening.

Several factors are contributing to this bullish outlook, including increased Liquefied Natural Gas (OTC:) (LNG) feed gas demand and the impacts of production curtailments and deferred well completions. LNG demand has been a major influence on prices this year, with prices fluctuating in response to flows from the Freeport LNG terminal.

Seasonal elements are also at play, particularly pipeline maintenance in the Permian Basin, which continues to suppress Waha gas prices into negative territory due to limited capacity. However, the National Oceanic and Atmospheric Administration's (NOAA) 8-14 day temperature forecast is predicting above-average temperatures for much of the U.S., which should spur further demand for natural gas.

“We think next week's report could produce a 70-80 Bcf injection, which is slightly below the 90 Bcf seasonal normal level,” RBC strategists wrote.

If realized, this trend could further tighten the supply-demand balance and bolster natural gas prices in the coming weeks.

“We expect the fall storage peak at just above 4 Tcf, which is ~300 Bcf above the 10-year average,” they predicted.