After slumping the last two days, natural gas cash market averages across the country staged a meager rebound on Thursday for Friday delivery despite the fact that futures prices continued to decline.

Potentially responding to the fact that much of the Lower 48 is warming back up after a mild string of four or five days cash points nearly across the board, from the Northeast, down through the Gulf Coast, across the midsection of the country and through the Rockies and into the West, posted gains from a couple of pennies to six or seven cents.

“After two days of steady drops in values, I think a lot of people paused on Thursday,” said a Northeast trader. “I know the weather services are looking for the eastern half of the country to heat back up this weekend, and people are also calling for California and the West to finally see some hot summer temperatures, so that could account for the gains.”

The mild rally after two days of fairly significant drops came as no big surprise as traders received neutral guidance from the screen on Wednesday. After only dropping four-tenths of a penny on Wednesday, the July natural gas futures contract will provide a lot more influence to cash traders on Friday as the contract fell below $4.500 on Thursday to close the regular session at $4.412, down 16.5 cents from Wednesday’s finish.

“One week ago all of the talk was surrounding whether we were going to see a five in front of prices,” said one Midcontinent marketer. “Now, I feel as if it is more appropriate to discuss whether we’ll see a three instead. It just goes to show, the moment you think you fully understand the natural gas market, you really haven’t.” Since the front-month contract’s June 9 high of $4.983, futures have declined 57.1 cents to Thursday’s close.

Even more telling is how the screen came off so significantly after the Energy Information Administration reported that 69 Bcf was injected into underground storage for the week ending June 10, which could be construed as supportive by some. Heading into the report, most industry watchers had their eyes on a 70-71 Bcf build, but the actual 69 Bcf addition fell well short of historical comparisons (see related story).

“The build of 69 Bcf was closely aligned with consensus expectations,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “It was supportive relative to an 87 Bcf five-year average, but that much had already been discounted into the price and we think the market will quickly pivot to looking ahead to near-average builds in the next few weeks.”

After starting the 2011 hurricane season on cue on June 1 with a short-lived small area of low pressure forming off of Florida (see Daily GPI, June 2), no disturbances were reported in the Atlantic Basin on Thursday, according to the National Hurricane Center and

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.