The August natural gas futures contract was set to open Friday near even at around $2.769/MMBtu, holding onto Thursday’s gains as the market continued to digest the implications of this week’s bullish Energy Information Administration (EIA) storage report.

EIA reported a 46 Bcf injection into Lower 48 gas stocks for the week ended July 13, roughly 10 Bcf below consensus estimates based on major surveys. The build also fell below the five-year average 62 Bcf injection. Stocks ended the period at 2,249 Bcf, 535 Bcf below the five-year average of 2,784 Bcf.

“If production continues at the same year/year (y/y) growth rate as June (up 8.1 Bcf/d) for the remainder of the refill season, we estimate that the season will end with storage at 3.5 Tcf (about 6% below average),” Jefferies LLC analysts said following Thursday’s report.

“For storage to reach 3.8 Tcf, we estimate that production would need to average roughly 10 Bcf/d higher y/y for the remainder of the refill season (this would imply production averaging around 83 Bcf/d, well above current levels). In these scenarios, we assume power demand of plus 2.0 Bcf/d y/y, hold exports flat with recent levels, and assume no y/y changes in residential/commercial or industrial demand.”

Analysts with Tudor, Pickering, Holt & Co. (TPH) said the report indicates the market was about 1.0 Bcf/d undersupplied on a weather-adjusted basis for the period.

“With around 17 weeks of injection season left, inventories would enter withdrawal season below five-year minimums (about 3.6 Tcf) if the market averaged around 2.0 Bcf/d oversupplied until November,” the TPH team said. “Despite a bullish print, outlook remains neutral,” as even with the prospect of increasing exports to Mexico on the El-Encino-Topolobampo pipeline, “cooling temperatures and the impending Northeast production ramp temper our expectations.”

Hotter temperatures this week could see next week’s EIA report come in even lower in the upper 20s to mid-30s, enough to push the year-on-five-year deficit to around 550 Bcf, according to NatGasWeather.

“We see Thursday’s report as quite bullish, especially if next week’s report prints under 35 Bcf,” NatGasWeather said. As for the overnight data, the Global Forecast System “held hotter trends from midday Thursday but failed to trend any hotter with it. The European model was little changed over the past 24 hours, although, overall the data is likely to be viewed as a touch hotter across the East Coast next week.

“Most importantly, numerous weather systems are still expected to arrive over the Midwest the next two weeks with comfortable temperatures, which will be countered by impressive heat across the western, central and southern U.S., where highs will consistently reach the 90s and 100s due to strong high pressure overhead.”

The pattern looks neutral overall, but perhaps a little bullish given the lean EIA build “suggesting production isn’t as strong year over year as what previous builds” had indicated, NatGasWeather said. “We see this week’s lows of $2.70 holding until next week’s report, unless there were to be much cooler trends in the early August pattern, which we currently aren’t expecting.”

August crude oil was set to open about 38 cents higher at around $69.84/bbl, while August RBOB gasoline was trading about 2 cents higher at around $2.0631/gal.