Speculation around the much anticipated storage report continuedto run rampant yesterday on trading floors across the natural gasindustry and that coupled with steady fund buying was enough tolift the futures market higher for the third day in a row. TheSeptember contract raced off to a fast start, but was unable toretest the $2.72 high set last Thursday. After notching a $2.66high trade around 10:30 EST the prompt month was left to chopsideways before eventually settling up 4.4 cents at $2.642.

But all the hype surrounding the weekly supply data seemed welldeserved when the American Gas Association said that only 26 Bcfwas injected into underground storage facilities last week. Thatfigure fell short, not only of last year’s 79 Bcf refill, but alsocompared to the range of market expectations centered on a 30-50Bcf refill. Total working gas in storage now stands at 2,306, 87Bcf less than a year ago (see chart). However, at least one traderwas quick to dismiss the scant injection. “[Storage] does not comeas a surprise to me. I had 30 [Bcf] in our office pool,” bragged aHouston based marketer admitting that he won the pool. “There weresome who looked for as 45 [Bcf] but that sort of number defiedlogic considering the oppressive heat and strong demand forelectric generation last week.” He may have not been alone becauseshortly after the storage report was release prices tumbled backdown to the $2.60 level.

However, another trader pointed to the latest six- to 10 dayweather forecast released by the National Weather Service (NWS)about the same time Wednesday afternoon as a contributing factor tothe price erosion. The NWS said the entire Northeast, most of theUpper Midwest, and California should expect below-normaltemperatures for the August 10-14 time period. Normal temperaturesare forecast over parts of the central plains, Southeast and eastof California, with the remaining third of the country, includingmost of Texas, slated for above normal readings.

Looking ahead, a Gulf trader feels that last week’s high of$2.72 is the number that needs to be retested in order for thebulls to really get the market rolling.

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