<i>Storage is the main price driver for natural gas. Storage also provides the most current and accurate snapshot of the natural gas market's supply and demand. The following data are from the U.S. Energy Information Administration.</i> Energy Circuit<i> takes no responsibility for the accuracy of this forecast.</i> Gas in storage is now nearly 200 Bcf above average for the date as we approach September and October, as storage recorded a build of 81 Bcf this week. Projections indicate we should enter the heating season in November with well over 3,000 Bcf in storage. Unless winter is exceptionally cold, gas supplies should be adequate. Ample storage and the absence of bearish news drove prices below $5.00/MMBtu for the first time this year, closing yesterday at $4.77/MMBtu. Despite a significant increase in drilling activity spurred by high prices, gas production in Canada and the U.S. decreased by about 1 percent in the first six months of 2004 compared to the same period in 2003. The current comfortable storage levels are evidently due to imports of LNG together with weak demand, caused in part by the extraordinarily cool summer over much of the U.S. I expect prices to increase again in 2005 as production continues to decline and weather returns to normal. <table cellspacing= 1 cellpadding = 1 border=1><tr align='center'><th colspan='5'><b>U.S. Natural Gas Storage</b> (in billion cubic feet)</th></tr> <tr align='center'><td>Date (2004)</td><td>Stocks</td><td>Change from prior week</td><td>Forecast change</td><td>Prior 5-year average stocks*</td></tr> <tr align='center'><td>Aug. 6</td><td>2,452</td><td>+72</td><td>+72</td><td>2,338</td></tr><tr align='center'><td>Aug. 13</td><td>2,530</td><td>+78</td><td>+92</td><td>2,397</td></tr><tr align='center'><td>Aug. 20</td><td>2,614</td><td>+84</td><td>+93</td><td>2,456</td></tr><tr align='center'><td>Aug. 27</td><td>2,695</td><td>+81</td><td>+86</td><td>2,518</td></tr><tr align='center'><td>Sept. 3</td><td></td><td></td><td>+72</td><td>2,603</td></tr></table> * Historical averages may differ slightly from those reported by USEIA.