The recent unpredictability of energy futures markets was on display yet again Wednesday as crude and natural gas broke ranks to explore different price directions. August crude gained $2.60 to close at $143.57/bbl, while August natural gas dropped 11.6 cents to finish at $13.389.

While jockeying to get their books in order ahead of the extended holiday weekend, natural gas traders were also forced to digest contrasting temperature forecasts for the next two weeks, a “well defined” tropical wave off West Africa and expectations for a larger-than-normal storage injection report on Thursday.

AccuWeather.com’s hurricane center was tracking a number of waves in the tropics on Wednesday, but one stood out from the rest. “The first well defined tropical wave of 2008 left the coast of Africa on Tuesday,” said AccuWeather.com’s Steve Penstone. “The AccuWeather.com hurricane center meteorologists will be closely monitoring the wave for signs of strengthening. The wave will cross an area of the Atlantic where it could develop into a tropical storm before approaching the Lesser Antilles by late Sunday or Monday.”

On the temperature front, Frontier Weather was calling for warmer-than-normal temperatures in the western and northern regions of the country for the July 7-11 period. For July 12-16 the forecasting firm saw above-normal conditions from the Rockies through the Northeast.

However, some forecasters see more mild temps in the near term. “Temps will remain mild enough to keep cooling energy demands across the eastern one-third of the U.S. below average for most of the next week or so,” said meteorologist John Dee. He noted that cooling demand would not be totally absent, and there is a chance for above-average temperatures in the Great Lakes over the holiday weekend.

Turning attention to storage, the build to be revealed by the Energy Information Administration (EIA) on Thursday morning for the week ended June 27 is widely expected to be larger than historical comparisons for the week.

A Reuters survey of 20 industry players produced an injection range of 73-103 Bcf with an average expectation of 89 Bcf. Golden, CO-based Bentek Energy said its flow model indicates an injection of 91 Bcf, bringing stocks 19.1% below the five-year high and 2.3% below the five-year average. The research and analysis firm expects a 62 Bcf injection in the East region with the Producing and West regions adding 19 Bcf and 10 Bcf, respectively. The number revealed Thursday morning at 10:35 a.m. EDT will also be compared to last year’s 84 Bcf build and the five-year average injection of 86 Bcf.

During the recent price advance in natural gas futures, the expectations of technical bulls have been driven higher, with some projections calling for prices well past the post-Katrina high of $15.780 posted in December 2005. A step was made in that direction in Tuesday’s trading. Walter Zimmerman of United Energy noted that August traded as high as $13.610 in electronic trading and sees a technical case for much higher prices.

“The small retreat from our resistance zone is not the follow-through lower the bears wanted to see,” he said. According to Zimmerman’s analysis, there is more room for the bulls to roam higher, and he pinpoints $13.755 as the next short-term objective. The $13.755 is derived from his Elliott Wave-driven methodology where prices advance (or decline) in a five-wave pattern, and $13.755 would represent a completion of just such a pattern.

“With $13.755 a more likely candidate for near-term resistance, the bulls should keep short-term control of the market. A decisive close above $13.755 strengthens the case for a peak into the $17.500 to $18.000 zone by early next year,” he said in a note to clients.

Market trends occur when both fundamental and technical factors fall into alignment. The technical case for higher prices is in place, but the fundamentals may bear watching. Supply bulls point to inventories that are 15.8% below last year and 2.7% below the five-year average. However, if weekly builds continue at the 90 Bcf rate achieved last week for the next 19 weeks, there should be no difficulty reaching and surpassing a plump 3,500 Bcf inventory by the start of the heating season.

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