Continuing the trend of back-and-forth swings ahead of expiration Wednesday, August natural gas futures, unable to ignore Thursday’s economic rebound and the recent strength in other energy commodities, climbed 14.5 cents during Friday’s regular session to close at $3.695, 2.6 cents higher than the previous week’s finish.

Traders said the uptick was likely in sympathy with outside factors rather than tied to any direct natural gas fundamental or technical factors. The gains stood in stark contrast to Thursday’s session, when the front-month contract dropped 24.3 cents, even after the Energy Information Administration (EIA) reported that a smallish 66 Bcf was injected into underground storage for the week ending July 17.

“We’re seeing a little bit of a seesaw here over the last week or so,” said a Washington, DC-based broker. “I haven’t heard of any particular market-impacting news on the weather or demand front, but I think natural gas wasn’t able to share in Thursday’s enthusiasm related to the Dow Jones Industrial Average going above 9,000 due to the inventories report, so it reacted Friday instead. Oil futures also continued higher Friday as well, so the natural gas market just wasn’t able to ignore it.”

September crude futures on Friday gained 89 cents to close at $68.05/bbl.

As for bullish gas fundamentals, the broker said she is still at a loss. “No hurricanes in the Atlantic have appeared, and the only heat is really secluded to Texas and California. We can’t shake this recent back-and-forth trading pattern,” she told NGI. “The six- to 10-day forecasts are also calling for a cold burst in the midsection of the country that could even trickle down into Texas, so the bulls really are not finding any ammo for their cause there either.”

The broker said Thursday’s trading session holds more sway than the action on Friday. “Thursday’s 24.3-cent drop still shows the underlying bearishness in this market. In order to turn this thing around we are going to need something significantly bullish to appear overnight.”

While some market watchers said Thursday’s slide in August futures set the bulls back, others said activity in the more deferred portion of the curve indicated a latent bullishness. Traders trying to buy strips following the release of natural gas inventory data were frustrated. “You get these dips, but then prices firm up right away, especially in the strips,” said a New York floor trader.

“We had some customers who were just a split second off. We were trying to do the front end of calendar 2010, Q1, and at one point the market was minus 4 cents bid to unchanged offered,” the trader said about Thursday’s action. “We were trying to buy minus 1 cent and by the time we got around to it the market was plus 2 at plus 5. That happened several times, and the minus 4 bid at unchanged was right when the report came out.”

The strength in the strips notwithstanding, other traders are neutral to bearish. “Although we were forced off a short position this week and into a neutral stance, we still view the probability of a retest of last week’s lows as high…with next Wednesday’s August contract expiration providing some catalyst in this regard,” said Jim Ritterbusch of Ritterbusch and Associates. Presently, Ritterbusch is on the sidelines “while favoring the short side from a sentimental vantage point. We still view September futures as likely to revisit last week’s lows at the $3.370 area during the coming one- to two-week period,” he said.

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