After carving out a new low for the move on Tuesday, August natural gas futures traders on Wednesday ignited a rebound that left the contract at $6.528, up 22.1 cents from Tuesday’s regular session close.

While traders and market watchers were not ready to report that the bottom was in, some said it likely is not far off due to the time of the season.

“In a sense, I think we are just rocking the price back and forth,” said Tim Evans, an analyst with Citigroup in New York. “On any given day, this market could be 20 cents higher or lower, but the funny thing is it doesn’t necessarily mean anything for the next day’s trading. I don’t see any material shift in the temperature outlook, at least in the short term. I also think the rally in crude futures helped natural gas Wednesday, but that relationship is so quirky it might not help tomorrow. On the tropical storm front, I think we are getting to that point in the season where we can look forward to some more activity.”

Evans said the time for a reversal to higher prices could be just around the bend. “Natural gas at some point here could reach the place on the calendar where it’s time for the funds to cover their short positions,” Evans told NGI. “Is that process starting yet? I don’t know. At some point the funds will want to take some chips off of the table because the hurricane risk is going to be increasing over the next six to eight weeks. Some of us are looking for a bottom, so the question we bring to the price action on a daily basis is ‘Are we there yet?'”

Prior to Wednesday’s session, technical analysts suggested that both the case for lower prices and the case for a rebound remained intact. “The bearish news is that Tuesday gave another new low and another new low close. The bullish news is that Tuesday gave another potential candlestick bottom and a close above the pivotal $6.270 level,” said Walter Zimmerman of United Energy.

Zimmerman noted that the sign of a potential bottom, a candlestick doji star, is not that convincing. “The doji star looks to us more like a spinning top — a congestion pattern, not a reversal pattern. We find the bearish news more significant than the bullish news, and we still see no compelling case for bottoming action. And in our book that keeps the case for a $6.185-5.960 target zone intact,” he said.

In its six- to 10-day forecast, MDA EarthSat predicted continued warmth in the Plains and Southwest, expanding into the Midwest and the East. However, recent computer runs have suggested the warmth may moderate.

“Some of the operational models over the past 24 hours have been offering twists to the forecast by allowing a cool upper level low to drift, trapped underneath the building Midcontinent hot ridging pattern. This roving feature would have the impact of preventing as much heat wherever it moves,” said Matt Rogers, MDA EarthSat meteorologist. He cautioned that the problem is that no model has offered consistency to the feature, so it does not show up on the ensembles (combined forecasts) very much at all. “Given that lack of consistency, [Wednesday’s] outlook continues to favor the ensembles and their continued big-picture thinking of warm to hot ridge expansion.”

By day 10 of the forecast, above- to much above-normal temperatures are predicted to encompass an area extending from Idaho to Missouri to New England.

Turning attention to Thursday morning’s storage report from the Energy Information Administration (EIA) for the week ended July 13, most estimates appear to be looking for a build in the high 60s Bcf to low 70s Bcf range. A Reuters survey of 22 estimates produced an average estimate of a 68 Bcf injection.

“I am looking for a 70 Bcf injection,” said Evans. “I think there is a surprising consensus around that number given that last week’s 106 Bcf build was not exactly the kind of statistic you want to use as a benchmark. It was a holiday week with reclassification thrown in.”

According to the EIA’s date-adjusted historical data, 63 Bcf was injected for the week last year and the five-year average build sits at 76 Bcf.

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