With prices spiking on Monday and then crashing lower Tuesday and Wednesday, this week has been a microcosm of the frenetic trading activity of the past four months, leaving traders yearning for the holiday weekend and the calming effect they hope will come with the shoulder months of September and October. After gapping lower at the opening bell Wednesday, the September contract cascaded lower throughout the session to finish at $3.288, down 19.5 cents for the session, but up 39.8 cents over the course of its month-long tenure as prompt contract. For an expiration day, volume in the gas pit was light, with an estimated 126,596 contracts changing hands.

After calling for a profit-taking sell-off since last Thursday, traders and market-watchers were mostly relieved Tuesday when the price slide finally took hold. The selling accelerated in overnight trading as local and commercial accounts continued to liquidate the long positions they had acquired as recently as last week. For many traders that meant selling out of September and immediately buying October futures. As a result, the October contract was not hit nearly as hard Wednesday, slipping only 12.8 cents to close at $3.403.

Looking ahead, most market-watchers look for higher prices in the next 30 days as the market heads into peak hurricane season. Also providing support are the string of lower-than-average storage injections. Noting that storage is still likely to reach the 3.2 Tcf mark by Nov. 1, Kyle Cooper of Salomon Smith Barney in Houston believes that Thursday’s report could feature another bullish injection figure. Specifically, he looks for a net build of 45-55 Bcf, which if realized would fall short of last’s year’s 74 Bcf increase and the five-year average build of 59 Bcf.

Cooper explained that one could view the string of small injections in one of two ways. “From the bullish case, electricity generation [of 80,000 GWh since the end of June] indicates solid economic activity and bolsters the case for overall natural gas demand growth…However, from the bearish perspective, those electricity generation levels were associated with very warm temperatures and thus, when temperatures do moderate, generation levels will likely fall dramatically and could lead to higher injections,” he wrote in a daily note to customers.

After the Energy Information Administration releases its storage report at 10:30 a.m. Thursday, traders will have a little more than a day to test drive the new prompt month before the holiday weekend. Following its schedule of closing early the Friday before Monday holidays, Nymex will shut down at 1 p.m. EDT Friday.

Although the tropics have been and continue to be, quiet with only three named storms thus far this hurricane season, traders realize that the first week of September is considered the peak of the season. That being said, traders may eschew the short side of the market for the long weekend.

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