October natural gas futures continued to inch higher Wednesday, lending more credibility with each passing day that the market’s seasonal low is already in the books. The prompt-month contract breached psychological resistance at $4 for a second session in a row before closing at $3.995, up 2.9 cents from Tuesday’s finish.

Wednesday’s increase brings the four-day streak of higher closes to a 22.7-cent total. Adding to the bullish flavor of the trading action, the October contract on Wednesday boasted both a higher low and a higher high than on Tuesday.

“The natural gas market continues to work higher, with a strong performance in the nearby October futures, despite market expectations for a net injection of 90-100 Bcf into U.S. storage for the week ended Sept. 10,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “We think this hints that our own, lower 73 Bcf forecast might be closer to the market, but it also points to a pickup in seasonal buying interest ahead of the heating season. As we’ve been noting too, since the market [has been] trending lower all summer despite a declining storage surplus, it may also be able to spring higher now, even in the face of a single bearish storage report.”

Evans said he expects his hypothesis to be tested over the next two or three trading sessions.

Taking a closer look at the Energy Information Administration’s storage report to be released Thursday morning at 10:30 a.m. EDT, Bentek Energy’s flow model is projecting a 98 Bcf injection, which would bring inventory levels to 3,262 Bcf. The research firm expects a 55 Bcf addition in the East Region, which it notes would tie for the largest injection in that region this season, while a 36 Bcf addition is expected in the Producing Region, which would be the second largest injection in that region for this season. Bentek added that the West Region is expected to have deposited 7 Bcf for the week.

“A 98 Bcf injection would bring U.S. storage inventory levels to 3,262 Bcf, 187 Bcf higher than the five-year average but 187 Bcf below the five-year high set last year,” Bentek said.

The number revealed Thursday morning will be compared to last year’s date-adjusted 66 Bcf build and the five-year average build of 77 Bcf.

Some market watchers commented that the previous day’s futures settlement was somewhat unusual. On Tuesday October futures rose 2.8 cents; November was unchanged; and December fell 4 cents. Most of the rest of the board was lower.

“We had net, new buying on Monday, so there might have been some follow-through buying yesterday [Tuesday], but the way it played out looks to us like it was more short-covering in October and even outright selling in December,” said Peter Beutel, president of Cameron Hanover.

Retail sales figures came in stronger than expected. Tuesday’s report on August retail sales showed a seasonally adjusted rise of 0.4% whereas economists expected a 0.3% increase. The number excluding automobile sales was 0.6%, and the market was looking for a rise of 0.4%. Although the numbers didn’t send the markets into a state of exuberance, they are mildly supportive of overall energy demand, and add support to the case that there will not be a double-dip recession.

The storm picture in the Caribbean and Atlantic Wednesday afternoon looked even more ferocious than it did on Tuesday as two Category 4 hurricanes — Igor and Julia — and Tropical Storm Karl continued to spin. However, the National Hurricane Center’s forecasted paths for all three storms continued to spare U.S. Gulf of Mexico energy production infrastructure.

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