After gapping lower following the overnight Access trading session to open Friday at $6.260, July natural gas traded within a slim 12-cent range as traders were quiet and action was scarce. After putting in a low of $6.170 in afternoon trading, the prompt month eased higher to close at $6.226, down 21.3 cents on the day and a whopping 95.9 cents lower than the previous Friday’s close.

“It was a very quiet trading day from the get-go. I think some people were likely taking three-day weekends,” said Steve Blair, a broker with Rafferty Technical Research in New York. “I think the market this past week has been trying to test out the near-term support numbers, which are down closer to $6.”

Looking at the weather situation, Blair said he doesn’t believe the price drop was related to moderate temperatures in the Northeast, mainly because he doesn’t believe temperatures in the Northeast have been all that mild. “It certainly has been pretty warm up here, so I can’t say this drop in prices is related to a lack of heat in the Northeast,” he said. “I think it is more a result of the fact that there is plenty of gas around. Storage is still sitting rather comfortably. Until that storage picture changes, I think we still have a cap to the upside and the downside. To the downside, I think $6 holds pretty good support. If it gets below $6, it will likely be capped by the $5.750 spot low. In my opinion, I don’t even think we can get there again.

“At some point, I think the heat is definitely going to come into play and eat into storage. In addition, once we get to a certain point in filling storage, it gets harder to put it into the ground. After 3.1-3.2 Tcf, it gets harder to get it into the ground and you will see some gas come out on to the market at that point, pressuring prices. However, I don’t think we will get to that point. Summer should take over sometime.”

Storage levels continue to be a focal point of traders and analysts alike, with some industry insiders claiming that the recent moderate storage injections might reflect a lack of storage space more than an increase in demand.

Traders and analysts are questioning whether Thursday’s 77 Bcf injection for the week ended June 16 and earlier mildly bullish surprises in weekly data were the result of a resurgence in demand or a lack of space for the ample quantity of gas in the system already. “What those surprises were is you just can’t get any more in — these pipes are just so full,” said George Speicher of Dow Corp. in Houston. “If you knew how much gas was in these pipes, storage would look more bearish.”

Tropical activity of interest has been confined to an area in the Atlantic north of the Caribbean and near the Bahamas. Meteorologists have identified an area of showers and thunderstorms, and although computer models suggest a lessening of shear and subsequent better organization, steering winds should eventually take this system to the west or northwest, according to AccuWeather. The most likely outcome is interaction with a stalled frontal boundary resulting in heavy rainfall along the eastern United States, it said.

The forecasting firm said it was also following tropical waves at 57 degrees West (east of the Windward Islands) moving west at 15-20 knots and another wave at 82 degrees West (western Caribbean) moving west at 10-15 knots. “There is no organization with either of these waves and so the remainder of the Atlantic Basin outside of the area near the Bahamas should be fairly tranquil the next few days,” it predicted.

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