There was both good news and bad news for the bulls in weekly physical natural gas trading during the week ended August 4. The bad news was that the market still continued to deteriorate with theNGI Weekly National Spot Gas Average losing 4 cents to $2.62, but the good news is that it fell far less than the previous week’s pounding, which took the market down 22 cents to $2.66.

Points in most producing zones fell about a dime, but the week’s greatest gainer proved to be Algonquin Citygate (non G) with a rise of 60 cents to average $2.64. The week’s greatest loser was Empress in Canada with a drop of $C0.78 to average $C1.90/Gj.

Regionally California, Appalachia, and the Northeast were able to pull off a win with the Northeast rising 36 cents to $2.56, Appalachia carving out a gain of 6 cents to $1.90 and California adding 3 cents to $3.00.

South Louisiana shed 14 cents to average $2.73, South Texas fell 13 cents to $2.73, and East Texas and the Midcontinent both traded lower by 12 cents to $2.73, and $2.55, respectively.

The Rocky Mountains fell 11 cents to average $2.52, the Southeast skidded a dime to $2.80, and the Midwest was off 9 cents to average $2.72.

September futures on the week lost 16.7 cents to $2.774 with the bulk of that coming with Monday’s near 15-cent drop on a milder change in medium-term temperature outlooks.

By the time Thursday rolled around bruised market bulls were wondering if there might be a repeat of the previous week’s thin storage build of only 17 Bcf. Expectations were running in the low 20 Bcf range and the EIA reported a storage build of 20 Bcf for the week ended July 28, right on target with market expectations. The market response was tempered at best. At the close on Thursday the September futures contract had fallen 1.1 cents to $2.800 and October had declined seven-tenths of a cent to $2.844.

The reported build was only 1 Bcf less than consensus estimates, and when the number was released, September futures dropped to $2.814 but were unable to break through the day’s high of $2.846 or low of $2.800 in place at the time.

Prior to the report traders were looking for a build on either side of the actual figures. Last year 3 Bcf was withdrawn for the week and the five-year average stood at 44 Bcf. JP Morgan calculated an 18 Bcf injection and Stephen Smith Energy estimated a 23 Bcf build. A Reuters survey of 24 traders and analysts showed an average 21 Bcf build with a range of +13 Bcf to +37 Bcf.

“The market response to the figure was uneventful to say the least,” said a New York floor trader. “We are looking at a range of $2.75 to $3.00.”

In spite of the weak market response, analysts saw the report as supportive. “The build for last week was in line with consensus expectations, slightly more than the 17 Bcf build in the prior week, and well below the 44 Bcf five-year average for the date,” said Tim Evans of Citi Futures Perspective. “So the report was bullish on a seasonally-adjusted basis, as expected.”

The Denver-based analytical team at Wells Fargo saw the report as neutral, with the market still undersupplied by 2 Bcf/d.

“The reported figure was 27 Bcf above last year’s reported figure and 21 Bcf below the five-year average of 41 Bcf. The surplus versus the five-year average has fallen by 210 Bcf over the past 13 weeks (16.2 Bcf per week on average), reflecting at least 2 Bcf/d of undersupply in the natural gas market.

“However, based on current cool weather forecasts, which should drive relatively weak power burn levels, our model projects an 85 Bcf cumulative storage build over the next two weeks. This would still be below the five-year average of 107 Bcf and would reduce the storage surplus to just 75 Bcf by the second week of August,” Wells Fargo said.

Inventories now stand at 3,010 Bcf and are 279 Bcf less than last year and 87 Bcf greater than the five-year average. In the East Region 25 Bcf was injected, and the Midwest Region saw inventories rise by 10 Bcf. Stocks in the Mountain Region were greater by 3 Bcf and the Pacific Region was down 1 Bcf. The South Central Region fell 17 Bcf.

In Friday’s trading weekend and Monday physical natural gas prices dropped by double-digits as weather was forecast to cool over the Northeast during the weekend.

Sharp declines in the Northeast, Appalachia and California led the charge lower. Only one point followed by NGI made it to positive territory on Friday, and the NGI National Spot Gas Average shed a stout 11 cents to $2.49.

Futures trading was far less exciting, with the spot September contract losing 2.6 cents to $2.774 and October easing 2.7 cents to $2.817.

Temperatures in major eastern markets were forecast to drop substantially over the weekend. predicted Boston’s high Friday of 87 degrees would fall to 77 Saturday and reach 74 by Monday. The normal high is 81. Philadelphia’s Friday high of 90 was seen easing to 84 Saturday and 79 by Monday, eight degrees below the seasonal norm.

Gas at the Algonquin Citygate plunged 63 cents to $1.94 and gas on Tennessee Zone 6 200 L fell 58 cents to $1.92. Gas on Tetco M-3 Delivery was quoted at $1.53, down 21 cents and parcels bound for New York City on Transco Zone 6 gave up 14 cents to $1.73.

“Over the next several days, much cooler air will spread from the northern Plains and Upper Midwest to the northeastern United States,” said meteorologist Alex Sosnowski. “The cool, dry air will mark an end to the recent rounds of thunderstorms. However, beyond Friday, one more dose of strong storms will affect part of New England. Drenching storms will slice across parts of the central plains this weekend.

“Energy demands will decrease as the cool air advances. Millions of people will be able to open their windows and turn off air conditioners and fans, and people waiting for a break from the heat and humidity to pursue outdoor projects will get their chance. Despite the cooler air, temperatures will still be high enough for swimming at most Atlantic coast beaches and may only interrupt the same for a couple of days over the Midwest.”

Declines at other market points were more benign on Friday. Gas at the Chicago Citygate fell 8 cents to $2.68 and gas at the Henry Hub changed hands 2 cents lower at $2.76. Deliveries to El Paso Permian shed 6 cents to $2.47, and gas on Northern Natural Demarcation was seen 8 cents lower at $2.56.

Deliveries to SoCal Citygate dropped 20 cents to $3.16 and gas priced at the SoCal Border Average retreated 18 cents to $2.74.

Traders holding positions over the weekend expose themselves to changes in the weather forecasts and although Friday’s nominal 2-cent change in the September futures is not a market shaker, analysts see a market where “seller caution could be seen today ahead of a weekend that could bring some major changes to the weather outlooks,” said Jim Ritterbusch of Ritterbusch and Associates. “[W]e still anticipate a further decline to about the 2.65 area by early next week where expected staunch support could set the stage for a sizable price advance. And despite the reduced importance of” Gulf of Mexico (GOM) “production amidst the shale revolution, we believe that a major tropical storm event into the GOM could pack enough psychological punch to spur a price gain that proves mismatched against any possible loss of supply.

“But while we see high probability of additional slippage to the $2.65 area, we also caution against fresh shorts as upside price possibilities across the rest of this month appear to exceed that to the downside. So, for now, we are maintaining a sidelines stance while also expecting additional price declines of about 15 cents relative to yesterday’s settlement,” Ritterbusch said.

Noon updates to morning weather model runs changed little. Commodity Weather Group data showed the European Ensemble rising 3.3 cooling degree days (CDDs), the American Ensemble -0.7 CDD, and the Canadian Ensemble -2.3 CDD. Adding the three together gives a rise of just 0.3 CDD or a negligible change in the CDD count. “These can sometimes change by double-digits,” Commodity Weather Group said.