After rallying Thursday on the coattails of a strong crude futures push, August natural gas futures continued their symbiotic relationship with liquids on Friday, following crude lower on the day.

The prompt month gave back 6.9 cents in a shortened session to close down at $6.148 ahead of the holiday weekend. August crude futures dropped 35 cents to close at $38.39/bbl.

“Trading on Friday was further retracement after Thursday’s rally,” said George Leide of Rafferty Technical Research in New York. “The market rallied, but with not a lot of steam, and now it is retracing downwards.

“The market looks ugly,” he added. “We held at support down in the $6.01-6.03 area on Wednesday and Thursday; however the rally could only take the market up to the first major resistance at $6.28-6.32. We continue to leave the two gaps from last week [see Daily GPI, June 30], which is very, very bearish and I am thinking we will make new lows, we just have to work our way down. I think we are headed down into the $5.75 area.”

With the all-important factor of weather still masking what type of summer the country is in for, New York-based Weather 2000 compared the current period to last fall.

“Remember the tranquil November that had most writing off the entire winter season, despite our warnings of volatile cold and snows in the East?” the forecasting firm asked. “An eerily similar scenario is developing of late. In late-November 2003 bearish-weather attitudes lulled people to sleep, assisted by a ‘lazy’ holiday weekend (Thanksgiving), only to be ‘shocked’ by the weather (and more importantly the forecasts) in early December.”

What followed was one of the chilliest and snowiest first three weeks of December in several years, and the rest of the winter season followed with more of the same, the company noted. “With models showing cool biases, the recent absence of headline heat waves and tropical developments, and other forecasters’ ‘convenient’ switch to cool summer projections, ‘shocks & surprises’ almost seem destined to churn Bar-B-Q-filled stomachs on Monday/Tuesday,” Weather 2000 added.

UBS analyst Ronald Barone noted that while the week ended June 26 experienced temperatures that were 23% cooler than normal and 29% cooler than last year, cooling degree days so far for the season are still averaging 17% warmer than normal and 16% warmer than last year.

The National Weather Service in its latest six-to-10-day forecast is calling for above normal temperatures across the East Coast and Pacific Northwest, while below normal conditions will take hold in the Midwest, the Rockies and Southwest. The remainder of the country should stay within seasonal ranges.

The Energy Information Administration announced Thursday that 93 Bcf was put into underground storage for the week ended June 25. The build fell short of last year’s 97 Bcf injection but came in well over the 82 Bcf five-year average build. As a result, the deficit to the five-year average has been erased for the second time this season as current stocks now stand 10 Bcf above the average.

Based on the current storage situation, Barone said “our calculations suggest that the industry will require an injection pace of 9.5 Bcf/d (versus 9.7 Bcf/d in the prior week) to get supplies to a solid comfort level of 3,150 Bcf by Nov. 1.” He added that this is relatively bearish when compared to with the 11.8 Bcf/d actual injection rate recorded last year.

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