After gapping lower for the second session in a row and reaching a new two-week low, natural gas futures rebounded at the close Wednesday amid a wave of expiration-day short-covering. The June contract initially dipped into the $5.70s early Wednesday, but a short-covering rally ended up boosting the contract to a final settlement of $5.945, up 4.5 cents for the session and 74.5 cents above where June began its tenure as prompt contract a month ago. Comparatively, May 2003 closed 82.2 cents lower at $5.123.

With weather forecasts largely unchanged from Tuesday and the weekly storage information due out Thursday, no fresh news was available Wednesday. That led to a wide, 23-cent trading range for the June contract. Trading in the July contract was more orderly, restricting prices to a 15-cent swath. More importantly, the July contract — by virtue of its 0.5-cent advance and $6.016 close — managed to finish the session above key support at the $6.00 mark.

Should the July contract continue its upward swing Thursday, Craig Coberly of GSC Energy in Atlanta keys in on the $6.06 area as an upside target. “Trading above $6.06 will support a conclusion that the short-term trend has turned up, at least to the extent of a rally to the declining resistance line in the $6.24-27 range,” he wrote in a note to clients Wednesday. “A close more than [8 cents] above this resistance line would imply the larger corrective pattern was complete and [that gas is in] the early stages of a move above $6.50.”

While technical factors may be starting to point higher, they may be offset by bearish storage data Thursday morning. Consensus estimates call for a 90-95 Bcf refill, which would easily exceed the year-ago refill of 72 Bcf as well as the five-year average of 73 Bcf. Last Thursday, the market tumbled down to the $6.00 mark on the news that a larger-than-expected 90 Bcf had been injected into underground storage facilities for the week ending May 16.

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