After carving out a wide, 57-cent trading range over the previous two sessions, natural gas futures stayed close to home Friday as many traders choose to wait on the sidelines until a clearer fundamental picture develops. The September contract finished at $3.303, down 6.4 cents for the day, but up 26.3 cents for the week.

Many traders surveyed by NGI were still a little shell-shocked following the stunning 3 Bcf storage injection announced by the AGA last Wednesday. “There is still a great deal of disbelief associated with [last week’s] report. Now that the initial wave of activity has crested, I think trading will remain quiet until it can be determined whether [last week] was an aberration or not,” a source commented.

Also a contributing factor to the market’s stolid behavior Friday was uncertainty surrounding tropical activity in the Caribbean Sea. After weakening over the Windward Islands Thursday night, Chantal was gaining strength as of press time Friday and was expected to reach tropical storm strength over the weekend.

“While the market is preoccupied with the storm for the moment, we don’t want to forget that the next AGA report poses a bearish threat, not from the risk of revision to prior data, but simply from a large injection, said Tim Evans of New York-based IFR Pegasus. “Anything over the 55 Bcf refill from last year would have some bearish influence, and we think the cooling degree day accumulations forecast for this week make a build of 90-110 Bcf a possibility.”

The technical picture, meanwhile, remains mixed. For George Leide of New York-based Rafferty Technical Research, the market is in a very pivotal spot after closing in the middle of its recent $3.25-40 trading range. “On a break, I would expect to see an additional 10-20 cents in the direction of the break. You can sell in front of the $3.40 level, but if the market moves through it, you want to be an aggressive buyer on any dip.”

If traders are able to pierce resistance in the $3.40 area, another layer of selling is likely in the $3.60 area, Leide continued. “You have gaps from the September chart, the daily spot chart and the weekly chart scattered throughout the $3.63-83 area. The market traded to $3.60, but wasn’t able to get any higher Thursday.”

On the downside, failure to hold $3.25 could lead to a test of the steeply sloping uptrend line drawn off recent lows in September futures. On Friday, that line was seen as support at $3.103 and on Monday it comes in at the $3.14 level, Leide said. The next potential for some buying, he continued, is at the confluent lows notched last Tuesday and Wednesday at $3.03.

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