After threatening for most of the morning to punch below the $6 mark, August natural gas futures rebounded from near its previous $6.025 low to settle at $6.155, up 3.7 cents on the day.

The reversal appeared to come in step with a similar rebound in crude futures around 1:40 p.m. (EDT). August crude futures jumped $1.39 on the day to close at $37.05.

Despite loosely mimicking crude for much of Wednesday, natural gas was more trading on its own off of the technicals, according to a Washington, DC-based broker. He noted that futures bounced off of the $6.03 mark, which basically coincides with August’s previous low of $6.025 on June 9. “We’ve come back down and basically tested that level and had a nice 12.5-cent rally off of it. Not too shabby there.

“We will see if that holds tomorrow,” he added. “The liquids really seem to have it in their head to rally. Why? I don’t know.” The crude rally was somewhat confusing due to the fact that the oil inventory reports released Wednesday were largely contradictory, he said.

“I tend to think you will probably see a bounce in natural gas tomorrow. The question is how long will it last if crude weakens or if gasoline really tanks again. I’m not sure we will see these things happen going into a long holiday weekend.”

Craig Coberly of GSC Energy in Atlanta said Wednesday morning that the natural gas futures market was probably in line for a day or two of consolidation or a rally before the decline resumes. “The consolidation/rally is not likely to exceed the $6.22-6.25 area,” he said, adding that he expects the consolidation period to last from one to three days.

“Longer-term, I continue to believe a decline into the $5.40-5.50 range is likely before gas makes a major bottom,” Coberly said. “However, a couple of wave relationships identify $5.85-5.90 as an important price level. I’m not sure how this fits in with a decline to $5.40-5.50, but it does say we need to [be] cautious and attentive as gas approaches $5.85-5.90.”

Regarding the Energy Information Administration’s natural gas storage report, which will be released Thursday morning for the week ended June 25, Tim Evans of IFR Energy Services said he is looking for a 90-100 Bcf net injection. Kyle Cooper of Citigroup is calling for a very similar build of between 89 and 99 Bcf. If these projections hold up, the build will be inline with last year’s 97 Bcf and well over the 82 Bcf five-year average, which would put this year’s inventory back into a surplus over the five-year average after slipping to a deficit last week.

As a result of the extended July 4 holiday weekend, Nymex markets will close at 1 p.m. (EDT) on Friday.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.