After plumbing lower price levels in overnight electronic trade and again on Wednesday morning, June natural gas futures made another run at $12 Wednesday afternoon as the contract recorded a high on the day of $11.975 before backing off to expire at $11.916, up 11.5 cents from Tuesday’s finish. July futures, which now assume front-month contract status, put in a high of $12.082 before settling at $11.995, up 7.6 cents from Tuesday’s close.

The natural gas futures market wasn’t the only energy commodity to rally after recording a loss on Tuesday. One day after recording a $3.34 drop, July crude on Wednesday punched back up above the $130/bbl mark by gaining $2.18 to close at $131.03/bbl.

“Wednesday was a choppy day for natural gas that ended up counteracting Tuesday’s move lower,” said a Washington, DC-based broker. “We really did not make a new high on the move, but we certainly rejected the lows pretty significantly. Right now it looks like we are stuck in a little bit of a trading range between $11.600 and $12.100.”

Looking at the recent price movement and the indicators at hand, the broker said he still has horns instead of claws for the time being. “I would say the psychology of the natural gas market is still on the bullish side of things. Crude is up pretty strong after a similar sell-off,” the broker added, noting that the recent scare to oil bulls did not last long.

“These stories of global oil demand being under assault because some of these emerging market countries are going to have to lower their subsidies for oil had been giving oil bulls a scare, but that thinking did not appear to be able to hold Wednesday,” he said. “I think all of the action in natural was really sort of in the context of what was happening in crude.”

Some top traders suggest that the market is currently a little “overcooked,” having attained price objectives near the $12 level. “We will suggest holding a modest or core long position while at the same time we will await a further potential pullback toward the $11 area before establishing a full trading unit,” said Jim Ritterbusch of Ritterbusch and Associates.

Ritterbusch noted that the funds are not willing to add to their sizeable short position and “that commercial selling interest is being limited by seasonal factors in which the need to hedge off inventory is of only passing concern. We would add that storage levels are widely perceived as on the short side within much of the industry, a situation that is also keeping commercials away from the sell side of the futures market,” he said in a Wednesday morning note to clients.

Looking ahead to Thursday morning’s natural gas storage report for the week ended May 23, the energy industry seems prepared for the Energy Information Administration to announce a build of 70 to 100 Bcf. The Washington, DC-based broker said he is expecting a 90-100 Bcf injection, while a Reuters survey of 19 industry players produced a range of injection expectations from 70 to 97 Bcf with an average expectation of an 84 Bcf build.

Golden, CO-based Bentek Energy said its flow model indicates an injection of 81 Bcf, which would bring stocks 23.7% below the five-year high and 0.8% below the five-year average. Bentek expects a 52 Bcf addition from the East region and builds of 17 Bcf and 12 Bcf in the Producing and West regions, respectively.

The number revealed Thursday morning will also be compared to last year’s build for the week of 106 Bcf and the five-year average injection of 92 Bcf.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.