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Storage Data, Revisions In Play; July Seen A Penny Lower

July natural gas is set to open a penny lower Thursday morning at $2.67 as traders await not only a government inventory report but also the release of revisions by a California utility. Overnight oil markets rose.

Traders expecting a more or less conventional Energy Information Administration (EIA) storage report Thursday may be in for a surprise. According to industry consultant Genscape, Monday saw SoCalGas report an adjustment to its storage inventory that could affect this week's EIA storage number.

"SoCal announced on May 26 they would be adjusting system inventory down by 4.62 Bcf due to adjustments applicable to Aliso Canyon storage. However, the change was not actually reported on the SoCal website until this Monday,” Genscape said.

"At this point it is unclear when SoCal will report this change to the EIA and when it will appear in EIA's weekly storage report. Significant adjustments are required to be reported to EIA, and adjustments greater or equal to 4 Bcf are noted in the weekly report. However, the timing of when the adjustment makes it into the report depends on when SoCal reports it to EIA. Last fall, ANR posted a surprise 9 Bcf inventory change midweek, which was reported in that week's report released the following Thursday.

"SoCal posted the change on a Monday, so it is possible that they reported the adjustment to EIA effective for gas week ending 6/17, or they could be reporting it effective for the current gas week. The latter would trigger a note in the report released 6/30, while the former would result in a note in today's report."

With or without the 4.62 Bcf adjustment, additions to inventory will once again fail to reach longer-term averages. Last year 71 Bcf was injected and the five-year pace stands at a stout 88 Bcf. IAF Advisors calculates an inventory gain of 60 Bcf while United ICAP is looking for a build of 64 Bcf. Citi Futures Perspective expects an increase of 56 Bcf and the Energy Metro Desk survey resulted in a 60 Bcf estimate.

Gas buyers can expect a return of western heat next week. According to weather blogger Steve Gregory of Wunderground.com, "While the extreme, record heat out West is easing off as record-setting upper-level heights fall some, Temps will remain well above normal across the entire western half of the nation for the next two weeks - with a possible resurgence to record levels west of the Continental Divide during week two."

In overnight Globex trading August crude oil added 73 cents to $49.86/bbl and August RBOB gasoline rose 2 cents to $1.6099/gal.

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