The June natural gas futures contract finished its run on Wednesday with a bullish short-covering bang, but not as bullish as some had expected for the contract’s last day on the board. June jumped to a high of $4.245 before backing off to expire at $4.155, up 10.4 cents from Tuesday’s close. July futures climbed 6.5 cents to close at $4.179.

“I think we saw a good deal of short-covering that came in on the June expiration,” said Tom Saal, a broker with Hencorp Futures in Miami. “Traders have beat this market down pretty well over the past few days, so I think people who were short the market waited till the last day to rally this thing. Surprisingly, I don’t think it rallied as much as I had been expecting, so I think we’ll probably see a little more with July as the spot month. We held at $4 on the way down, so I think we will see another run higher. Hurricanes are still a little ways off, but we are starting to see the heat ratchet up, which will bring in gas demand for cooling load.”

Saal added that the natural gas markets are acting a little peculiar during this refill season. “One thing that has been interesting about this market over the last week or so is the counterseasonal backwardization that we’ve been experiencing,” he said. “I really don’t understand why it is happening. Typically during a storage injection cycle we have a forward carry market where the natural gas cash price is trading at a discount to the prompt futures month. This past week we’ve been seeing cash prices trading at a small premium instead. That by itself should be bullish for prices down the road.”

All eyes will be on the natural gas storage report Thursday morning, where the industry appears to be expecting the Energy Information Administration to report an injection just on either side of 100 Bcf for the week ending May 21.

A Reuters survey of 25 industry players produced a 93 Bcf to 110 Bcf injection range with an average expectation of a 101 Bcf build. Bentek Energy’s flow model projects a 98 Bcf injection, which would bring inventory levels to 2,263 Bcf. The research firm expects the East Region to inject 51 Bcf while the Producing and West regions inject 31 Bcf and 16 Bcf, respectively.

Bentek said all signs point to the U.S. gas industry entering winter with plenty of gas. “New season-ending record inventories very likely this year as above-average injections continue,” Bentek said in its weekly storage note.

The expectations appear to split historical comparisons. Last year 105 Bcf was injected for the week and the five-year average build is 94 Bcf.

Citi Futures Perspective analyst Tim Evans, who is on the record with a 110 Bcf estimate, said the supply situation makes it hard to state a bullish case.

“We continue to see potential for above-average storage injections, both in Thursday’s report and for the next few weeks, which continues to add pressure for prices to break lower, not higher,” Evans said. “The market may try to turn the June 1 start of the official Atlantic hurricane season into a bullish cause, but we note the risk will remain relatively low until mid-July or so, even in an active year.”

Traders see natural gas as somewhat oblivious to the turmoil swirling around other energy and financial markets. “Natural gas is the lone wolf of positive commodities,” said Eric Bentley, a senior trader at Viking Energy in New York. In Tuesday’s activity he observed funds rolling June short positions into July, and “July TAS [trade at settlement] was well bid on the close. It looked like some shorts were leaving the market.”

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