Natural gas futures traders on Wednesday continued to chip away at the downside as the August contract recorded a low of $4.303 before closing the day’s regular session at $4.306, down 4.8 cents from Tuesday’s finish.

With August sticking between $4.303 and $4.389, Wednesday was the third consecutive session that the prompt-month contract traded in a tight range. Wednesday also marked the third consecutive close lower.

“The natural gas market continues to bob along at a low level, apparently unimpressed by the ongoing warmer-than-normal temperatures across much of the northern U.S. or the prospects for a pick-up in tropical storm activity that could occur as early as next week,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “Natural gas traders have apparently become quite skeptical of these weather forecasts, or at least of their ability to drive natural gas prices to a higher level.”

Looking to Thursday morning’s natural gas storage report for the week ending July 9, Evans is expecting a 79 Bcf build, while a Reuters survey of 26 industry traders produced a wide 55 Bcf to 90 Bcf injection range with an average build estimate of 78 Bcf.

Bentek Energy’s flow model is projecting an 88 Bcf injection for the week, which would bring inventory levels to 2,850 Bcf. The expectation is based on a 45 Bcf build in the East Region, a 32 Bcf addition in the Producing Region and an 11 Bcf addition in the West Region.

In its weekly storage outlook Bentek said a level of 2,850 Bcf would be below year-ago and five-year-high levels by 23 Bcf, but stocks would remain 284 Bcf above the five-year average. “Storage fields in the Producing Region showed large injections during the storage week that ended July 9 despite extremely hot temperatures that hit the Gulf and East markets,” Bentek said. “Five storage facilities reported injections for the week higher than 1 Bcf with Pine Prairie leading the region with a 2.3 Bcf injection compared to average injections of 14 MMcf during the previous two weeks.”

The number revealed at 10:30 a.m. EDT will be compared to last year’s date-adjusted 88 Bcf injection and the five-year average injection of 89 Bcf. “Expectations for Thursday’s storage report range from the lower 70s to at least 90 [Bcf], suggesting a neutral-bullish report compared with the 89 Bcf five-year average for the date,” Evans added.

Some analysts suggest that the range-bound nature of the natural gas market may endure for the remainder of the summer. “After briefly breaking above the $5 level in June, the gas market traded back into the mid $4 range early in July. The fundamentals remain negative. There is a very good chance that this summer’s trade could look a lot like last year, a volatile two-sided trade,” said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm.

DeVooght sees the health of the global economy impacting commodity and natural gas prices. “The debate on where the major world economies are heading, which will determine the direction of the commodity markets, will not be decided in the short term. There is a very good chance we could see a continuation of the volatile two-sided trade we have seen over the past nine to 10 months for quite some time,” he said.

He also observed that energy trading is likely to be heavily impacted by the pending financial regulations proposed by the Obama administration (see Daily GPI, July 2). “A key component of this legislation is to require the majority of over-the-counter transactions or swaps to be cleared on an exchange, rather than to be held between individual companies. This legislation, if passed, will dramatically change the energy trading landscape. The uncertainties surrounding this legislation and who it impacts have been keeping a lot of the major players on the side, especially the producers.”

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