After dropping lower and then spiking higher in its typical post-storage report theatrics, natural gas futures came back to near unchanged Thursday morning, prompting bulls and bears to turn to something other than storage for their next price clues. Without having to search too far, they found favorable medium and long-lead weather forecasts, which quickly translated into higher natural gas futures prices. August closed 10.2 cents higher for the session at $2.943.

According to the Energy Information Administration, there was 2,422 Bcf of working gas in storage on Friday, July 12, a net weekly increase of 69 Bcf. Stocks were 347 Bcf higher than last year and 366 Bcf above the five-year average of 2,056 Bcf. In the East Region, stocks were 127 Bcf above the five-year average, following net injections of 53 Bcf. Stocks in the Producing Region were 185 Bcf above the five-year average of 603 Bcf after a net injection of 7 Bcf. Stocks in the West Region were 54 Bcf above the five-year average after a net addition of 9 Bcf. At 2,422 Bcf, total working gas is above the five-year historical range.

The 69 Bcf injection fell in the lower half of the 63-80 Bcf range of market expectations but was slightly more than the 67 Bcf injection from the week prior. Since the injection season began back in April, the market has averaged a weekly injection of 66 Bcf, about 30 Bcf less than the average rate of injections from a year ago. Last year at this time, the market realized a 101 Bcf injection.

For Ed Kennedy of Pioneer Futures in Miami, the storage report was right in line with expectations. “We sold off, then we rallied. Now that it got that out of its system, the market can move forward… I want to be a bear, but I’m from Missouri and this market needs to “show me” that it can trade lower. In order for that to happen, the market needs to break below $2.76. Until it does, I remain on the sidelines,” he said.

According to the latest 30- and 90-day forecasts released Thursday by the National Weather Service, above-normal temperatures are likely for much of the West for August through October. Additionally, the NWS calls for above-normal readings in the populous southeastern U.S. where gas demand for electric generation is prominent. Also supportive Thursday was the release of fresh forecasts for next week showing the continuation of above-normal temperatures across the western half of the country and also northern New England.

In daily technicals, August has gained some bullish momentum by posting a higher low, a higher high, and by closing near the top of its daily range. If it can add to Thursday’s gains, traders could try to test major resistance at $3.05, which was the neckline of the completed head and shoulders formation. On the downside, support is seen at this week’s lows in the $2.76-77 area.

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