Natural gas futures were trading slightly lower early Thursday as traders prepared to digest another larger-than-average inventory build from the latest weekly government storage data. The June Nymex futures contract was off 2.2 cents to $2.588/MMBtu shortly after 8:30 a.m. ET.

Estimates ahead of the Energy Information Administration’s (EIA) latest storage report, set for release at 10:30 a.m. ET, have been pointing to a larger-than-average double-digit build for the week ended May 3. A Bloomberg survey as of Wednesday showed expectations ranging from a build of 79 Bcf up to 108 Bcf, with a median 87 Bcf injection. Last year, EIA recorded an 85 Bcf build for the period, and the five-year average is an injection of 72 Bcf.

Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at a build of 86 Bcf. NGI’s model predicted an 89 Bcf injection.

“It was cooler than normal across the northern U.S. for a little stronger heating demand, while hotter than normal across the southern U.S. for a little stronger cooling demand” during this week’s storage period, NatGasWeather said. “Our algorithm sees a larger range this week of 83-86 Bcf, a touch to the bullish side.”

As for the overnight weather data, the forecaster observed “only very slight changes,” with the overall pattern likely to result in larger-than-normal injections for at least the next four EIA reports. This could potentially extend a streak of weekly improvements in the storage deficit to the five-year average to “an impressive 10 weeks.”

“We continue to view the camp that holds prices to either side of $2.62 as being in control, with bears barely hanging on after bulls made a quick run at it yesterday,” NatGasWeather said. “June prices have held up well this week, but the after-EIA report trade should be quite telling if bulls truly have enough strength to convincingly overtake $2.62, or if bears have been stalling, waiting to sell the recent bounce.”

According to Powerhouse President Elaine Levin, selling the rallies has been a profitable strategy for traders in this market, meaning short-covering could help explain the strength of Wednesday’s 7.3-cent surge.

After the June contract got above $2.600 last week, traders “probably came in to try to sell it again, and when it turned around” this week “it probably pushed some people out,” Levin told NGI.

The backdrop for recent price action is the seasonal pattern that shows prices typically rally at this time of year, she said. The momentum indicators as of late Wednesday also appeared to favor the bulls.

“The daily charts, some of the momentum indicators there are saying we should buy this thing, believe it or not,” Levin said. “...There’s a lot there that says this downside may be taking a break for a little bit.”

June crude oil futures were down 41 cents to $61.71/bbl shortly after 8:30 a.m. ET, while June RBOB gasoline was up fractionally to $1.9779/gal.