With traders continuing to mull the implications of a second consecutive large bearish miss from weekly government inventory data, natural gas futures were trading close to even early Friday. The Nymex July futures contract was up 0.4 cents to $2.328/MMBtu just after 8:30 a.m. ET.

Bespoke Weather Services viewed the latest forecast as “slightly warmer” heading into Friday’s trading, though with the 15-day outlook remaining below normal in terms of national demand.

“Of note is some improvement in the upper level patterns in the modeling,” especially in the American data set, “but somewhat in the others as well, which makes us feel like there is some warmer risk to forecasts starting late next week,” the forecaster said.

Bespoke said its “best guess” given uncertainties over the reliability of recent supply readings is that prices should be nearing a bottom at current levels.

“Today will be an interesting one to see how the market behaves in the wake of a second consecutive very bearish” Energy Information Administration (EIA) storage report, Bespoke said. “We have weather being slightly more supportive at least, and the balance data that we have still looks rather strong, with this week’s burns the tightest in a long time.

“The issue we have is still whether or not we can trust the supply data we see, as the numbers don’t seem to add up in terms of the last two EIA reports. As a result of all of this, we remain ‘slightly bullish’ at these levels, as that’s the best guess we have based on the data we see and the risk of some modest warmer changes in the weather pattern, but we have to lower confidence a little after a big miss two weeks in a row.”

On Thursday, the EIA reported a whopping 119 Bcf build into inventories for the week ending May 31, well above last year’s 93 Bcf injection and the five-year 102 Bcf average build. Total working gas in storage as of May 31 stood at 1,986 Bcf, which is 182 Bcf above last year and 240 Bcf below the five-year average, EIA said.

A week earlier, EIA also surprised the market with a 114 Bcf injection for the period ended May 24 that exceeded both consensus and the range of expectations.

According to analysts at Raymond James & Associates, this week’s 119 Bcf build implies the market was 4.0 Bcf/d looser compared to the same week last year, excluding weather-related demand. Over the past four weeks, the market has averaged 2.8 Bcf/d looser year/year, the analysts said.

Tudor, Pickering, Holt & Co. (TPH) analysts observed that “compared to year-ago levels, inventories are at an 11% surplus, and on a weather-adjusted basis, historical degree day correlations point to a 4 Bcf/d oversupply, an increase from 3 Bcf/d last week. This week’s hefty build comes despite total degree days 20% above the five-year average and, to make matters worse, latest weather forecasts are shifting bearish for natural gas demand.

“...An early look at next week’s storage report shows balances 9 Bcf tighter on a week/week basis, implying a build of around 110 Bcf, however, as indicated, gross flow data suggests a smaller build at around 95 Bcf.”

According to EBW Analytics Group, another injection above 110 Bcf could be in the cards for next week’s report. That possibility could lead traders to try to test support for the July contract near $2.28 Friday or early next week.

“With weather-driven demand expected to rise by 6 Bcf/d over the next three weeks and projected end-of-injection-season storage just a smidge above 3,400 Bcf, however, we expect gas prices to strengthen significantly before the July contract goes off the board on June 26,” EBW CEO Andy Weissman said. “Bulls are likely to have the upper hand again soon.”

July crude oil futures were up 46 cents to $53.05/bbl shortly after 8:30 a.m. ET, while July RBOB gasoline was trading around 1.7 cents higher to $1.7241/gal.