Choosing to run with the petroleum complex Wednesday, July natural gas futures skyrocketed in the afternoon, reaching a high of $6.80 before settling at $6.789, up an astounding 41 cents on the session.

Petroleum futures helped lead the way as the prompt month contracts racked up enormous gains. July crude settled at $54.60/bbl, a jump of $2.63 from Tuesday’s close. July heating oil and July unleaded gasoline also shared in the gains, increasing 9.05 cents and 7.72 cents to settle at $1.54/gallon and $1.5442/gallon, respectively.

“You had a decisive breakout in all of the energies on Wednesday,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “There is no question in my mind that these markets have broken their downtrends.”

As an example of just how big the move was on the day, the broker pointed out that July crude was almost $2 higher than the breakout target of $52.80, while July natural gas was nearly 30 cents higher than its $6.50 breakout point.

He said that while some of Wednesday’s meteoric rise was short-covering by the funds, they “weren’t the big numbers yet.” As to why the sizeable up move occurred Wednesday, Kennedy said “That’s a damn good question. There is nothing on the fundamental side that is readily observable, but something might come up later. There is something going on out there.

“Between [Wednesday afternoon] and the time we go home on Friday, I think we will see a little bit of a correction. It could be as much as the $6.40 to $6.50 area, but if this is a real bull move — and I suspect that it is — we are not going to get to the support areas. Bull markets rarely do get to their support.”

Wednesday’s significant up move made Thursday’s oil and natural gas inventory reports all the more anticipated. Looking at the natural gas storage situation, it appears likely that the Energy Information Administration (EIA) will reveal a fairly neutral build for the week ended May 27.

A Reuters survey of 19 industry players produced an expectation that a 90 Bcf build will be reported for the week. Citigroup’s Kyle Cooper is looking for a build between 84 and 94 Bcf, noting that “if the apparent supply/demand balance remains intact, inventories above 3,400 Bcf are considered possible by early November.”

The ICAP-Nymex storage options auction, which runs from 3-4 p.m. EDT on Wednesday, produced a consensus forecast of an 89.9 Bcf injection. The number revealed Thursday morning by the EIA will be compared to last year’s 87 Bcf build and the five-year average injection for the week of 85 Bcf.

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