September natural gas prices were set to open roughly 2 cents higher at around $2.835 as the market continues to digest the third straight bullish storage injection reported by the Energy Information Administration (EIA).

The EIA reported a 35 Bcf build into inventories for the week ending July 27. The print was far below expectations and the 42 Bcf five-year average. Working gas in storage stood at 2,307 Bcf as of July 27, 688 Bcf below year-ago levels and 565 Bcf below the five-year average.

“EIA data is very tight, but production appears to have already rebounded back closer to record highs. It’s a matter of whether the market is ready to show concern about low storage levels yet, which it has not the last few weeks but is showing early indications it may now,” Bespoke Weather Services said.

Compared to degree days and normal seasonality, the 35 Bcf injection is about 0.8 Bcf/d tight versus the five-year average, according to Genscape Inc. Relative to the previous week, total power generation was down about 12 average gigawatt hours (AGWH). Collectively, nuclear and renewable generation were up about 2 AGWH week/week (w/w) as wind was up a little more than 2 AGWH and other renewables were close to flat w/w. Coal was down an estimated 8 AGWH w/w, and gas generation was down about 6 AGWH for an estimated -1.2 Bcf/d less gas burn w/w.

EBW Analytics said after last week’s storage miss (for the week ending July 20), the September contract was unable to mount a sustained rally, with prices slowly eroding over the past few trading sessions. “This time, though, may be different,” CEO Andy Weissman said.

He noted that the injection reported on July 26 occurred just before the first cooler-than-normal week this summer. By contrast, this time, the bullish storage injection and the weather are in synch, with extremely hot weather forecast for weeks 1 and 2.

“A test of resistance at $2.86-2.89/MMBtu is likely, with $2.92 not out of the question,” Weissman said.

Indeed, the latest weather forecasts show conditions that are “fairly impressive but still not delivering heat across key demand regions in the South,” Bespoke chief meteorologist Jacob Meisel said. Specifically, confidence across weather guidance increased that heat should return Aug. 14-17, but actual gas-weighted degree days (GWDD) did not increase by much at all.

Instead, data has remained consistent that the South should remain slightly below normal through the long range even as the Midwest and Northeast trend hotter than average. The result will still be GWDDs coming in slightly above average, although not quite as much as they could be, especially as the South is the only region where temperatures seasonally peak in August, he said.

Meisel noted, however, that weather guidance overnight Thursday also did not continue any cooling trends and short-term forecasts trended slightly hotter across the East, “which should keep cash prices firm,” Meisel said.

The futures strip is modestly more supportive early Friday, he said, but the market rarely sees large moves on a summer Friday following a large Thursday EIA move. “Instead, we would expect $2.83-$2.85 resistance to be firm today and would look for a move back towards $2.78 as production returns to highs.”

Crude oil futures were trading nearly 20 cents lower at $68.77, while RBOB Gasoline futures were trading about a half-cent higher at $2.0735.