After gapping higher following the overnight Access trading session, August natural gas futures pushed even higher following the Energy Information Administration’s 10:30 a.m. EDT report that only 59 Bcf was injected into underground storage for the week ended July 14. After reaching a high of $6.230, prompt-month natural gas settled the day at $6.091, up 22.9 cents.

August natural gas opened the day at the psychological $6.000 level and was trading there just prior to the report’s release. In the minutes immediately following the report, August natural gas reached $6.110, before pushing higher. After notching its high for the day at noon, the prompt month eased a little into the afternoon.

“While the storage number was a little small, it was still within the range of expectations. In other words, it was no great shock to the market,” said Tom Saal, a broker with Commercial Brokerage Corp. in Miami. “I think what we are seeing in this rally is that the market overdid it to the downside earlier this week. The main thing is we finally have some weather.”

Looking at the July futures contract expiration, Saal said August’s current price is just about right. “Your point of reference should be that $5.887 where the July contract expired,” he said. “We are a quarter over that with some heat, so I think that should be the point of reference, not the lows.

“There was some fund-buying late last week and some fund-selling during the first two days of this week,” he said. “In typical fashion, the funds buy it to find out where the sellers are, which was up around $6.40. Then they turned around and sold it to find out where the buyers were, which turned out to be around $5.50. So we have ourselves a nice little range right now.”

The 59 Bcf injection was on the small side as most industry expectations, which appeared to be looking for an injection in the 60s Bcf. According to a Reuters survey of 22 industry players, the average of the expectations predicted a build of 62 Bcf. Golden, CO-based Bentek Energy predicted a build of 67 Bcf. The ICAP derivatives auction held after the close of Nymex floor trading Wednesday revealed a consensus build expectation of 63 Bcf, while analysts at Fimat USA expected an increase between 40 and 70 Bcf and Ritterbusch and Associates was expecting a 65 Bcf build.

The week’s injection was spot-on with last year’s 59 Bcf injection but was considerably lower than the five-year average build of 79 Bcf.

As of July 14, working gas in storage stood at 2,763 Bcf, With two weeks in July left to go, storage is poised to easily surpass the record July ending inventory record of 2,791 Bcf established at the end of July 1991. The EIA’s own Short Term Energy Outlook for July 2006 forecast ending July stocks at 2,852 Bcf.

Stocks as of last Friday were 427 Bcf higher than the same time last year and 562 Bcf above the five-year average of 2,201 Bcf. The East region injected 45 Bcf for the week, while the West and Producing regions chipped in 8 Bcf and 6 Bcf, respectively.

While the storage report was slightly smaller than expected, recent petroleum supply reports have not been kind to the bulls. Wednesday the Department of Energy reported an increase in crude supplies of 151,000 barrels, yet expectations were for a decline of 650,000 barrels. Gasoline supplies also were above expectations rising 1.5 million barrels.

Violence and measures to bring an end to the conflict swirl in the Middle East. Late Wednesday Israeli aircraft attacked Hezbollah’s headquarters in south Beirut, dropping about 23 metric tons of explosives. Two Israeli soldiers and a Hezbollah militant were killed in a clash in southern Lebanon. United Nations Secretary-General Kofi Annan has asked the five permanent Security Council members to consider a force to secure the border between Israel and Lebanon as part of a cease- fire.

Tropical Storm Beryl continues to serve as a reminder that the hurricane season is well under way. It’s currently located 260 miles southwest of Nantucket, MA and is packing winds of 60 mph. AccuWeather is currently following tropical waves at 48W and 20 N (east of the Windward Islands) and 75W and 21N in the Caribbean. The forecaster says that neither feature shows signs of organization.

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