October natural gas is expected to open 3 cents lower Thursday morning at $3.92 as traders anticipate a government report that is expected to show well above normal increases in natural gas inventories. Overnight oil markets slumped.

The shoulder season has now begun in earnest, and storage injections that some have estimated might reach 100 Bcf or more may be ready to pounce. Not this week at least. This time around, analysts are looking for an upper-80s Bcf build. Nonetheless, the contraction in the deficit is nothing to sneeze at. Last year, 64 Bcf was injected, and the five-year pace stands at 60 Bcf.

Jim Ritterbusch of Ritterbusch and Associates is looking for an increase of 87 Bcf, and Citi Futures Perspective comes in with a low 70 Bcf estimate. A Reuters survey of 27 traders and analysts revealed an injection of 82 Bcf with a range of 65-89 Bcf.

Bentek Energy’s flow model calculates an 87 Bcf injection with the increase from last week’s 79 Bcf due almost entirely to the Labor Day holiday and commensurate reduced power burn. “The holiday weekend helped push total storage injections higher despite a continuation of the seasonally high temperatures in the eastern half of the country. Total demand fell nearly 1.7 Bcf/d from the previous week, with power burn demand accounting for almost 100% of the decline,” the company said in a report.

It went on to say that its “sample of deliveries to power plants within the Producing Region fell more than 1.0 Bcf/d from the previous week to average 8.8 Bcf/d. This represents the lowest levels since the July 25 storage week when the EIA announced a 19 Bcf injection for the region.”

The eastern heat wave was no match for the holiday weekend and “total population-weighted cooling degree days in the East Region increased from the previous week; however the holiday weekend offset the higher temperatures and the region reported a stronger sample injection from the previous week, likely bringing the total injection for the region back above 60 Bcf again on the week.

“Between the Sept. 5 storage week and the end of the injection season, the Producing Region averaged an injection of 21 Bcf per week. The region will likely need to post a similar injection pace in order to push the total U.S. injection above 100 Bcf during the second shoulder season.”

Market technicians following Elliott Wave and retracement don’t see the market’s 18-cent advance Monday and Tuesday followed by Wednesday’s 3-cent setback as sufficient to generate much more in the way of market gains. “To begin to unravel the bearish case for another leg down to another new low on the year, spot natgas must now break above $4.050 and the 12-month strip must now break above the 4.020 level,” said Walter Zimmermann of United ICAP in closing comments Wednesday to clients. “The inability to take out these key resistance levels does not prove that the trend is still down, but it does keep the bearish case alive.”

In overnight Globex trading October crude oil fell 93 cents to $90.74/bbl and October RBOB gasoline shed 2 cents to $2.5024/gal.