Unable to follow up on their whopping 27.6-cent rally on Tuesday, August natural gas futures spent Wednesday shaving off some of the gain ahead of Thursday morning’s natural gas storage report for the week ended July 2. The prompt month traded as low as $6.335 before settling at $6.37, down 5.4 cents on the day.

Crude futures on Wednesday once again played a part in natural gas’ direction. August crude futures dropped 57 cents to close at $39.08/bbl, a far cry from Tuesday, when the prompt month jumped $1.26 to settle at $39.65/bbl.

“A little bit of [the rally] Tuesday was natural gas on its own,” said George Leide of Rafferty Technical Research in New York. “There was some heat that showed up that wasn’t there prior.

“We gapped up Tuesday at $6.215, trading only as low as $6.23. When we traded to $6.32, we figured the next level we were going to see was something around $6.45-6.50, and that is what we saw Tuesday. On Wednesday, we backed up from that level.”

Looking ahead over the next few days, Leide said he is looking for a trading range of $6.21-6.50/Mcf. Commenting on the Energy Information Administration’s storage report to be unveiled Thursday, Leide said Rafferty’s survey shows an average build of 98 Bcf.

Tim Evans of IFR Energy Services said estimates range as high as 106 Bcf with a consensus in the 95-100 Bcf range, while Kyle Cooper of Citigroup said he is looking for a build between 93 and 103 Bcf..Whatever the injection number turns out to be, it will go up against a 96 Bcf five-year average build as well as the 147 Bcf build figure reported in the same week last year. However, last year’s inflated figure included 36 Bcf in accumulated revisions, so the weekly increase was a more modest 111 Bcf.

With real heat finally making an appearance, the question becomes whether natural gas futures will be able to unhook its wagon from crude. “The heat is on,” according to NY-based Weather 2000. The firm sees more sizzling weather ahead in the West and expects hot, hazy and humid weather to blanket almost the entire Central and Eastern portions of the country.

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