With little in the way of fresh fundamental or technical impetus, natural gas futures drifted sideways and lower Tuesday as traders elected to wait for a clearer supply-demand picture to develop. The September contract remained within an extremely tight 5.5-cent range, well beneath Monday’s gap lower open, but safely above support in the $3.03-10 area. At the closing bell, September was 1.7 cents weaker at $3.17.

With Tropical Storm Chantal weakening on its course across Mexico’s Yucatan Peninsula, traders were able to focus their full attention toward the release of new storage data this afternoon. A week ago the American Gas Association rocked the natural gas trading community when it announced that just 3 Bcf was injected into underground storage facilities for the week ending Aug. 10. The market reacted accordingly, spiking 37.4 cents last Wednesday.

As might be expected, preliminary estimates ahead of the release are wide-ranging, calling for injections as low as 40 Bcf or as high as 100 Bcf. On balance, however, most market-watchers look for a 50-75 Bcf refill, which encompasses last year’s 55 Bcf refill as well as the five-year average refill of 69 Bcf. At 2,286 Bcf, storage currently stands 249 Bcf more than year-ago levels and 134 Bcf more than the five-year average. Last week was the first time this summer that the oft-quoted year-on-year surplus did not increase.

While admitting that expectations ahead of Wednesday’s report range from absurd (40 Bcf) to ridiculous (110 Bcf), Ed Kennedy of Miami-based Pioneer Futures is hesitant to venture a guess as to what the AGA will report. “If we see a number below 50 Bcf, I think it is more than reasonable to expect a rally. A number of 70 Bcf or more and a test of support is likely,” he said.

In daily technicals, support is seen in the congestion area between $3.03 and $3.10. On the upside, resistance is at the top of Monday’s gap lower at $3.265.

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