After three days of declines, natural gas futures bulls seized back control going into the weekend as the July contract closed on Friday at $4.781, up 13.4 cents from Thursday’s finish but 1.6 cents below last week’s close.

In a quiet trading session attributed to people getting a head start on one of the first real weekends of summer, the prompt-month contract traded between $4.675 and $4.815.

“Volumes were light going into the weekend as it appeared traders called it a day early, but when all was said and done, we find ourselves still in a bullish breakout of the original $3.800 to $4.300 trading range,” said a Washington, DC-based broker on Friday. “We touched the top of where we would have expected to get to, which was at $4.960. The next critical number higher is $5.060. If $5.060 gets taken out to the upside, then this is no longer a rally in a bear market. We’re watching that number pretty closely.”

Commenting on the midweek declines, the broker said they were impressive, but failed when it counted. “Sure we had three straight days lower, but it couldn’t accelerate into Friday. When you have buying on a Friday after a couple of days of selling, that’s moderately bullish.”

On the downside, the broker sees important support at $4.390, while $5.060 is crucial to the upside. “If we break through $5.060, then we’re really looking into the mid-$5 area before we would expect to run into congestion,” he told NGI.

Earlier forecasts of warm temperatures have given way to more moderate temperature estimates, and although analysts see the market sliding lower without help from supportive weather, it presents a buying opportunity.

“In the absence of significant assistance from the temperature factor, this market appears set for a further price downdraft back into the $4.25-4.50 zone where we will be looking to probe the long side,” said Jim Ritterbusch of Ritterbusch and Associates.

He added that it was easy to “construct a bullish demand case for this market, [but] we find it equally simple to describe a bearish current supply situation with storage levels still more than 14% above five-year averages. This dichotomy between a supply overage and ongoing improvement in non-weather-related demand could contribute to continued choppy, sideways trading activity but within a new and higher trading band than the $4.00-4.50 price range that predominated throughout this past spring,” he said Friday morning.

Students of the economy were not pleased with the 8:30 a.m. EDT release of May retail sales figures by the Commerce Department. Changes in retail sales are widely followed as the most timely indicator of broad consumer spending patterns, and consumer spending accounts for more than half of gross domestic product. Analysts were expecting a gain of 0.4%, identical to the healthy 0.4% gain posted in April, but the actual figure came in at a disappointing minus 1.2%. July natural gas futures fell about 3 cents immediately after the release of the data.

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