Next-day gas bounded higher Tuesday, led for the most part by an enthusiastic screen that had to factor in the expiration of the July contract as well as longer-dated temperature forecasts showing above-normal temperatures.

Only a few points in the Rockies and East fell into the loss column, and the market was led by stout gains in the Gulf, Texas, Midcontinent and Midwest. The NGI National Spot Gas Average gained 6 cents to $2.66, but the day’s top performer was the expiring July futures contract. At the close, July had added 20.1 cents to $2.917 and August had risen 14.9 cents to $2.890. August crude oil recovered $1.52 to $47.85/bbl.

“I don’t know if I would call natural gas a bona fide bull market,” said a trader with FCStone Latin America in Miami. “Natural gas is very volatile and more than likely it is reacting to not only expiration, but also weather-related demand, but also what happened today in [Pascagoula] Mississippi, an Enterprise gas plant exploded (see related story).

“The market is looking for an excuse to trade higher. We have been low for a while and technical targets have been exceeded. We have settled above Bollinger Band resistance and taken out an intervening [weekly] high at $2.495. The market has also confirmed a bullish “W” pattern on the bar charts”.

In spite of abundant, if not burdensome, supplies, traders don’t see a lot of mileage in pursuing the short side of the market. “This market has spiked this week as consensus of temperature forecasts has shifted away from a cool Midcontinent trend and back toward hot patterns across most of the U.S.,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning report to clients.

“This shift will generally maintain a trend of sharply downsized storage injections that have kept the supply surplus in declining mode throughout the recent spring period. Evolving shifts beyond the weather factor are also developing to support the spot market in a process of strengthening the gas curve ahead of today’s July contract expiration.

“Narrowest contango in the front July-August spread since January is being seen this morning with a miniscule 2.5-cent contango comparing with an approximate 11-cent carrying charge seen just a month ago. Until the natural gas time spreads show evidence of sustainable reversal, we will likely steer clear of the short side of this market.”

Technical analysts versed in Elliott Wave and retracement analysis see the natural gas market as having completed a normal advance from recent lows. However, the case is not clear as to whether this is the end of the line for further futures gains. “As our $2.763-2.854-2.870 target was met, we can make a pretty good case for a completed five-wave advance up from the $2.080 low in the July contract,” said Brian LaRose, a technical analyst with United ICAP.

“However, there has been no rollover on the technical front. Typically, a technical shift will precede a price shift. That has not happened. Will be interesting to see if the August contract can continue to climb higher from here following July expiration.”

Gas traders in the daily market focused on California and western points will have their hands full as temperatures are expected to be well above normal. “A cold frontal boundary will generate active weather over the Plains on Tuesday, while temperatures spike above normal over the intermountain West and the Great Basin,” said Kari Strenfel, a meteorologist at Wunderground.com.

“Monsoonal moisture and daytime heating will trigger isolated showers and thunderstorms over the desert Southwest, the southern Sierra Nevada, the southern Great Basin and the lower intermountain West. Temperatures will be 10 to 15 degrees above normal across most areas west of the Plains. Heat advisories will stay in effect for central Nevada and parts of Southern California.”

In the physical market, forecasts of increasing and above normal temperatures in major markets helped support next-day prices as well as the strong screen. Wunderground.com forecast that Tuesday’s high in New York City of 73 would jump to 87 Wednesday and reach 88 on Thursday, five degrees above average. Chicago’s Tuesday high of 67 was expected to rise to 77 Wednesday and reach 85 on Thursday, 2 degrees above normal.

Gas on Alliance rose a dime to $2.79, and deliveries to the Chicago Citygate rose 10 cents as well to $2.80. Gas on Consumers was quoted 9 cents higher at $2.80, and packages on Michigan Consolidated gained 11 cents to $2.80.

Other market centers were also firm. Gas on Dominion South was unchanged at $1.84, but parcels at the Henry Hub gained 10 cents to $2.86. Deliveries to Opal added 3 cents to $2.68 and gas at the SoCal Citygate rose a dime to $3.21.