Although prompt-month natural gas was able to put in a high of $7.070 during the regular session Friday, ultimately, June futures dropped lower in the afternoon. The contract hit a low of $6.750 before settling at $6.775, down 13.1 cents on the day, but 22 cents higher for the week.

"The market really likes this $6.50 to $7.50 trading range," said Ed Kennedy, a broker with Commercial Brokerage Corp. in Miami. "What bullish case could you possibly make. Yes, it is supposed to be a very hot summer, but it hasn't started yet. It is also supposed to be a very active hurricane season, but that hasn't started yet either. With plenty of gas to start off the season, I have to say we are in pretty good shape. What is this market going to rally on?"

Kennedy pointed out that there was short-covering earlier Friday, which is not out of the ordinary ahead of the weekend. "We didn't even hold those gains," the broker said. "As soon as traders tried to push the market a lot higher on Friday, the selling came in and that was it. I would have to classify the close as going out on a weak note. We really are in that twilight zone in between the heating season and the air conditioning/hurricane season. There is nothing to pin anything on right now."

Prices soared Thursday when market expectations of a build in the 60 to 80 Bcf range were not met as the Energy Information Administration reported a 53 Bcf increase in inventories for the week ended April 28. June futures jumped 30 cents to settle at $6.906 on Thursday.

Suggestions were made that the increase might be due to a pick-up in industrial demand. "The bullish surprise relative to what the weekly weather shift implied sparked some talk that industrial demand may be picking up, but we see no clear pattern to confirm that theory," said Tim Evans of Citigroup. He noted that during the past 12 weeks, storage data has been bullish relative to the heating degree day accumulations seven times and bearish five. For the most part the data has also alternated between bullish and bearish variances from week to week. "We'd still describe that pattern as 'erratic' rather than 'bullish' or even 'supportive.'"

He went on to say that beyond the temperature-adjusted performance, the market also faces the more immediate problem of last week's conditions, which swung to warmer-than-normal on average. With heating requirements still exceeding air-conditioning demand in the overall mix, this implies lighter-than-average demand and a higher injection in this week's report. "Depending on the actual accumulations, we think injections could jump into the 90 to 100 Bcf range," Evans said. "That would compare with five-year average injections of 71 Bcf. The lack of a credible bullish storage encore to Thursday's 53 Bcf injection could limit the price reaction."

Heating degree days notwithstanding, analysts are starting to take a close look at the Gulf of Mexico. "We are seeing frantic warming in the region, more so than normal," said Kevin Kerr, editor of Global Resources Trader. "This does not bode well for the folks in the Gulf Coast. We could see a hurricane much earlier than we ever have before if these patterns continue," he said.

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