Natural gas futures reversed direction again on Wednesday — this time to the upside — on short covering by local traders ahead of Thursday’s release of fresh storage data. With Wednesday’s 6-cent advance, the July futures contract remained unable to register a back-to-back daily increase or decline for more than a week. It closed at $5.757, close to the middle of its recent $5.46-6.12 trading range.

Weaker prices in the overnight Access trading session and a gap lower open Wednesday morning gave the impression the market would make a run at last Wednesday’s low of $5.46. However, higher prices in the crude oil futures market gave bulls something to work with. “Selling dried up pretty quickly [Wednesday],” said Ed Kennedy of Commercial Brokerage Corp. in Miami. Cash looked like it would firm up and locals were quick to cover, he said.

Looking ahead, however, the market could easily reverse yet again Thursday as cash prices actually ended the day significantly lower and weather forecasts for the weekend have turned decidedly neutral to bearish. “Gadzooks, that was some two-day heat wave.” Kennedy quipped. “Sure it was hot for a couple days but now the forecast for this weekend is calling for temperatures to return to the 70s and 80s for much of the East.”

Also of bearish influence Wednesday was continued concerns over how large a storage injection figure will be released Thursday morning by the Energy Information Administration. Consensus refill estimates are coming in at the 105-115 Bcf level, which if realized would dwarf the 81 Bcf refill from a year ago as well as the five-year average injection of 85 Bcf. Leading up to last week, a record-setting 114 Bcf had been injected into storage in each of the previous three weeks, prompting many market watchers to turn in their bull horns and don bear coats.

Noting the brief duration of the hot temperatures this week and the fact that next week will include the Independence Day holiday, Kennedy looks for a couple more large weekly injection figures.

July futures will expire Thursday at 2:30 p.m. EDT. Because picking the price direction of natural gas futures on expiration day is like nailing Jello to a tree, most market observers have switched their focus to the August contract. Craig Coberly of GSC Energy in Atlanta looks for a continuation to the downside, followed by another up-leg. “[Tuesday’s] price performance was in accordance with the outlook for a decline to the support area defined by the two parallel 1-cent per day Gann support lines,” he wrote in a note to customers. Once these levels of support ($5.42-55 for August) are reached, Coberly calls for a rally that should exceed early June highs at $6.625.

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