A 15.5-cent pop higher in August gas futures Monday left some analysts and brokers considering the possibility that the market has found a summertime bottom due to recent higher temperatures, expectations of smaller storage injections and the likelihood of Atlantic hurricanes. But most observers said they aren’t willing to write off the downtrend just yet. The August contract ended the day at $5.381.

“This may indicate an easing of the intermediate-term selling pressure here, helping to set the stage for an eventual bottom with summer heat, hurricane threats to production and the eventual approach of the heating season all serving to help steer prices higher, although not necessarily right away,” said IFR Pegasus futures analyst Tim Evans. He still sees this week’s storage report “whittling away at the 348 Bcf” storage deficit compared to the five-year average.

“Today’s bounce is constructive, but we think the market may require more base building in order to have a solid shot at the higher resistance levels, when the fundamentals are only evolving toward a somewhat more supportive posture,” he added in a note to clients.

Jay Levine of Advest Inc. sees Monday’s rise as “a temporary bounce” to relieve oversold conditions “within a market that is still trending sideways to lower.

“Obviously the market has been focusing on, and aptly so, the storage injections, which have been running at a good clip. And the temperature has generally, with some exceptions, been pretty mild. Without sustained heat we’re basically going to be trading sideways to lower, with the occasional bounce because of hurricane activity and uncertainty about production damage.”

The National Hurricane Center on Monday reported a tropical wave about 170 miles east of the Windward Islands. The NHC said the tropical disturbance was weakening but could still form into a cyclone. That threat may have been a small factor contributing to Monday’s price rise.

In addition, crude oil prices rose back to $30/bbl Monday. “The rest of the petroleum complex has retained its value,” noted Levine. “If you look at the outer months, crude for September is $29.66, October is $29.20, and November is $28.65. Obviously that market is [being sustained at higher price levels]. I don’t think it is ultimately sustainable, but for the time being with the nervousness in the supply situation, here we are.”

There also are a few predictions out there that this week’s gas storage report will show an injection that is quite a bit lower than the market has seen over the last month and a half. Consultant Stephen Smith, for example, is predicting only an 83 Bcf injection, compared to 97 Bcf reported last week and much higher injection in the prior weeks. He also is expecting a series of smaller storage injections over the next four weeks because of the fall in gas prices, the strength in competitive fuel prices and the likely corresponding increase in gas demand.

However, other market experts, such as Kyle Cooper at CitiGroup, are expecting a weekly injection of as much as 110 Bcf. Evans sees something between 90 and 100 Bcf, and Levine is calling for a 105-110 Bcf weekly refill.

“In my mind, the trend is still sideways to lower,” said Levine. “We may get another day of an upward move, but I think we are still going to trend lower because those injections are going to trend higher.

“I have some technical targets in the $4.80s. They represent what I actually see as a downside target and a near-term support level. But the $5 level is pretty significant both psychologically and technically.”

On the upside, Levine expects the market will “get capped at $5.60-65.”

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