Coming out of the extended July Fourth weekend with a bang, natural gas futures hit the ground running in Tuesday morning trading. The August contract rallied from the opening bell, sending bears into hibernation for fear of being trampled by bulls, who were on a roll.

As of 12:30 p.m. (ET), August natural gas futures were up a whopping 25.7 cents to trade at $6.405. The prompt month settled Tuesday up 27.6 cents at $6.424. The move came in stark contrast to trading on Friday, when August retraced from Thursday’s rally, giving back 6.9 cents in a shortened session to close down at $6.148 ahead of the holiday weekend.

The jolt Tuesday morning came as a sign that natural gas futures are not quite ready to trade on their own fundamentals, preferring instead to hitch a ride with crude. August crude futures closed Tuesday up $1.26 at $39.65/bbl.

“Basically, crude oil took off,” said Tom Saal of Miami-based Commercial Brokerage Corp. “I think that is the main culprit here. What you had was some short-covering by funds that led the charge on the day.”

In order to sustain the rally, Saal said this rally “is going to have some legs under it” with support from fundamentals. He noted that while there is currently no weather to support the current rally, there are forecasts that are now calling for significant warmth. “We finally got our first heat wave report to hit the Midwest and Northeast next week. At least that’s what the projections are,” he said.

Pointing out that futures is trading at a premium to the cash market, a scenario that normally encourages storage injections, Saal said the industry should look for some “interesting” EIA storage numbers this Thursday and next Thursday.

Tim Evans of IFR Energy Services said that while the natural gas market may not be at the top of its range yet, Tuesday’s “dynamic move higher” suggests that it could be tested over the course of the next few sessions.

“There are still only the slightest flickerings of serious storm activity in the Atlantic Basin and the temperature outlook is mixed, but for now the stronger petroleum prices and the recovery in physical demand from its July Fourth holiday trough have been enough to send the market surging to the upside,” he said. “Thursday’s DOE storage data may be the next reality check for traders, but we think injections may be limited to the 75-85 Bcf range, yielding a moderately bullish comparison with the 96 Bcf five-year average build.”

Evans added that the market could also get a reaction from the comparison to the 147 Bcf figure reported in the same week last year. However, he noted that the inflated figure included 36 Bcf in accumulated revisions. “The weakly increase was a more modest 111 Bcf,” Evans said. “Still, it does appear the refill for last week will be on the low side, helping to sustain the growing bullish sentiment.”

Kyle Cooper of Citigroup said he is looking for a build between 93 and 103 Bcf. “A build in our range would continue to indicate a temperature-adjusted supply/demand balance that is considered slightly bearish,” he said. “Quite simply, there has been absolutely no indication of tightness in the supply/demand balance. Cash prices well below screen in July are also certainly not indicative of any physical tightness. This market remains primarily tied to crude, which is currently again being driven by funds.”

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