Wednesday's rally in natural gas futures values differed from the ones on both Monday and Tuesday in that the September contract was able to hold on to most of the day's gains. After reaching a high of $4.756, the prompt-month contract closed the regular session at $4.737, up 9.8 cents from Tuesday.

The day's action gave hope to the bulls that the upside remained open. Both rallies on Monday and Tuesday failed to gain any traction as the September contract closed 22.2 cents and 6.2 cents lower, respectively. Some market watchers said futures could have been firming up on Wednesday in anticipation of another small storage injection report Thursday.

"We continue to see generally supportive conditions, with expectations for a net injection of 42 Bcf (or less) in Thursday's [Department of Energy] report, below the 47 Bcf five-year average refill," said Tim Evans, an analyst with Citi Futures Perspective in New York. Thursday's storage number will also be compared to last year's date-adjusted 67 Bcf injection. He noted that the 11- to 15-day temperature forecast, which features above-normal temperatures across nearly the entire country, likely promises more supportive storage reports to follow.

Evans also pointed out that a lot of weight should not be placed on the slow start to the 2010 Atlantic hurricane season. "While the current crop of tropical waves doesn't look like it will amount to much, the hurricane season is due to move into its most active seasonal phase," he said. "With these supports, we continue to see more upside potential for natural gas prices than downside risk."

Taking a closer look at Thursday morning's natural gas storage report for the week ending July 30, a Reuters survey of 28 industry players produced an injection range of 25 Bcf to 44 Bcf with an average build expectation of 33 Bcf. Bentek Energy's flow model is projecting a 27 Bcf injection for the week ending July 30, which would bring inventory levels to 2,946 Bcf. The research firm expects the East and West regions to inject 31 Bcf and 3 Bcf, respectively, while the Producing Region withdraws 7 Bcf.

"A 27 Bcf injection will bring storage inventories down to below 2009 and five-year record high levels by 134 Bcf, but remain above the five-year average by 219 Bcf," Bentek said in its weekly storage note. "Storage injections have slowed down during the last few weeks due to warmer-than-normal temperatures across much of the U.S. and also due to some offshore supply disruptions from storms in the Gulf. Since May, injections have been 16 Bcf lower, on average, from the record 2009 pace."

Following Tuesday's session, short-term traders were confounded by the inability of natural gas to trade with the other energies. "Everything else has been strong as far as the other markets, crude, heating oil and gasoline, but natural gas can't even keep its head up," said a New York floor trader. "I'm not hearing much in the way of any spread trades being in the market of long crude oil and short natural gas, but I think if it trades down to $4.50, it's another opportunity for a buy, and I am still looking for the market to bounce back above $5 in the next 30 days."

Recent gains in the stock market have not gone unnoticed by analysts, but whether those will translate into an improved economic climate for natural gas is an open question. "Rising equity and complex prices have some speculating that future demand could be upticking. Demand might uptick, but with the amount of gas coming online it is difficult to see any significant price upside at this time," said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm.

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