The expiring August natural gas futures contract finished on a high note Wednesday as traders suggested the perception of upward price momentum might be enough to carry the market past $5. August closed up 9.9 cents to $4.774 and September added 7.2 cents to $4.718. September crude oil dropped 51 cents to $76.99/bbl.

Short-term traders were of the view that the market has more upside. "We tested up to the low $4.90s and then fell out of bed, but I think the market has room to [move to] $5.10 to $5.15 over the next week or so," said a New York floor trader.

The trader was not suggesting any new weather patterns or tropical storm activity, but said the market could move higher just on "momentum. Some of the spreads are moving out a little bit with the market moving up. The buying seems to be feeding on itself the last couple of days, and I think that is because some of the shorts are waiting until the last minute to cover or roll their positions and are getting squeezed.

"We've seen the market move from $4.45 to $4.90 over the last couple of weeks, and the momentum is to the upside. We'll be looking for follow-through the next couple of days."

On the economic front market bulls were not pleased with petroleum inventory data and durable goods figures. Prior to the release of oil inventory data from the Energy Information Administration, traders were looking for a reduction in hefty petroleum inventories. A Bloomberg survey of 16 analysts revealed a median draw on crude oil for the week ended July 23 of 1.73 million bbl, but the actual figure came in at a stout 7.308 million-bbl build. Gasoline increased 91,000 bbl and distillates added 936,000 bbl.

The 8:30 a.m. EDT release of June durable goods orders by the Commerce Department was equally disappointing.. Expectations were for a rise of 1.0%, but the actual figure came in at a disappointing minus 1.0%.

Others also concede to an upward price dynamic. "In view of this week's reestablishment of upward price momentum, any bullish surprises within the numbers could have a much larger impact than any unexpectedly bearish figures," said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. He is neutral on the market for now, but is "forced to concede to an improved chart picture that could easily open the gates to a run at the $4.90 level per nearby futures on even a minor storm development."

Natural gas traders will get to look at inventory figures of their own Thursday morning. A Dow Jones survey revealed an average build of 34 Bcf from a sample of 22 traders and analysts, and a similar Reuters survey showed a gain of 35 Bcf from a poll of 27 analysts. Industry consultant Bentek Energy using its North American flow model predicts a much thinner 26 Bcf build with the East adding 29 Bcf, the Producing Region falling 1 Bcf and the West falling 2 Bcf. These will be compared to last year's 70 Bcf injection and a five-year average of 50 Bcf.

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