After checking higher yesterday morning, natural gas futures made another push to the upside early in the afternoon as traders digested the latest natural gas storage supply data. The October contract received the biggest boost, shuffling 6.1 cents higher to close at $2.420.

According to the American Gas Association, 77 Bcf was added to underground storage facilities last week, bringing storage to 78% full at 2,572 Bcf. While the injection easily exceeded both last year’s 42 Bcf refill and the five-year average build of 69 Bcf, it came in at the low end of the 77-100 Bcf range of market expectations. Last week the AGA announced a 76 Bcf refill. Storage now stands 386 Bcf above year ago levels and 216 Bcf above the five-year average.

While some traders were impressed by the market’s ability to probe higher on the bullish news, others felt the rally was lackluster, potentially paving the way for another thrust lower ahead of the weekend. If the market does filter lower, it will encounter buying at the confluence of Friday’s and Tuesday’s lows in the $2.255-265 area. Beneath that level, support is seen at the psychologically important $2.00 mark.

However, Cynthia Kase of New Mexico-based Kase and Company expects the bounce to continue, potentially driving October futures prices up to the $3.30 area. At the same time, she believes that as long as the $3.30 level holds as resistance, the market remains in its current bearish environment.

“There are many technical signs that point to the market being poised at a decision point from which a bounce should take place. The bounce could be relatively modest, holding below $2.75 for October, $3.00 for November, and $3.35 for December. However, prices could rise much higher and the market could still remain susceptible to low prices,” she wrote in her Commentary on Gas for this week.

If, however, the market does not realize more of a bounce than what was seen Wednesday, she admits that the downside move could be more severe, with the potential for prices to extend beneath the $1.610-625 double bottom seen back in August 1998 and February 1999.

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