An ample supply of gas, moderating temperatures and the lack of threatening tropical weather activity continues to put downward pressure on natural gas futures prices, according to Gene McGillian, an analyst with Tradition Energy. On Wednesday the September contract declined by 2.8 cents to close at $4.239.

Despite the bearish tint to the market, the analyst noted that prices are in no hurry to freefall with the peak time for Atlantic hurricane activity just beginning.

"Everybody in natural gas is kind of watching paint dry these last few days," McGillian told NGI. "It looks like the market is slowly finding a bottom after failing to really break through $5. I don't think we're done to the downside yet, but a large part of the sell-off is probably behind us until we move through this upcoming three- to five weeks of prime hurricane season."

He noted that the market is having trouble with direction right now. "It can't really bounce off these new two-and-a-half-month lows, but it can't really break through dramatically either. This is why I think we'll see a grind lower until we get past the second week of September. The market is getting shorter, which leaves it vulnerable to some short-covering, especially if we get a smaller-than-average injection. We continue to increase the storage deficit to last year and reduce the surplus to the five-year average, but the way the back of the board has been trading recently suggests that there really isn't any concern about the supplies that are going to be on market in the next six months to two years."

McGillian said prices over the next month will be tied to tropical weather activity, or the lack thereof. "The question is whether we can get by the next couple of weeks without a hurricane disruption. If we can, the push would probably be down to $4 and we'll see whether we can make a new low for the year. For now, the September all-time contract low at $4.140 is the current support level we're looking at."

Heading into Thursday morning's storage report for the week ending Aug. 13, McGillian is eyeing a 30 Bcf build, while a Reuters survey of 31 industry players produced a 23 Bcf to 41 Bcf injection range with an average build expectation of 31 Bcf.

Bentek Energy's flow model is projecting a 32 Bcf injection, which would bring inventory levels to 3,017 Bcf. The research firm expects a 40 Bcf injection in the East Region with the West Region chipping in another 2 Bcf and the Producing Region withdrawing 10 Bcf.

"Despite robust gas production this year, record heat and cooling demand in the high-population market areas have trimmed storage injections back from what could have also been record-high inventories by now," Bentek said in its weekly storage outlook note. "Demand in the U.S. is estimated to be 15 Bcf/d higher year over year. Demand in the Southeast is up 14%, and in the Northeast and Midwest regions by 9%, so far this injection season. U.S. storage inventories are above the five-year average but 180 Bcf below the five-year maximum set last year."

Bentek said it expects this trend to continue. "Relatively narrow summer-winter spreads -- September or October vs. January -- and cash premiums to the prompt month are certainly not calling for large injections currently. Entering into the shoulder months, storage injections are expected to ramp up but remain below year-ago levels. If five-year average injections occur, storage inventories would end Oct. 31 at 3.7 Tcf, 225 Bcf above the five-year average inventory but 91 Bcf under the five-year high set last year."

The number revealed by the Energy Information Administration at 10:30 a.m. EDT will also be compared to last year's date-adjusted 54 Bcf build and the five-year average addition for the week of 50 Bcf.

Top traders see little change in the mix of price drivers. "We hate to continue to sound like a broken record, but the news remains the same for the gas market. We have more than adequate supplies. A lot of gas can come to market if demand pushes up," said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm. In his view, demand for natural gas is weak because of the soft U.S. economy. "Even the much-touted hurricane season has been a disappointment for the gas bulls. The lack of any storms moving into the Gulf has been keeping the gas market on the defensive."

DeVooght continues to counsel trading accounts to hold on to an October $4.50 call, end-users to stand aside, and producers to hold the remainder of a 12-month $5.50 put/$7.50 call that was initiated in December.

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