After being thwarted in repeated attempts to punch through the$4.23 level during the first hour of trading, natural gas bullsturned in their horns Friday, giving way to light sellingthroughout the rest of the session. Limited to an extremely tight,7-cent range for the day, the August contract slipped 1.6 cents tofinish the week at $4.15.

Several sources were surprised by the lack of substantivefollow-through after the market’s impressive 13.5-cent gainThursday. “The market looked strong at the open, but we couldn’tget out of the blocks,” a trader said. Meanwhile, cash prices,which notched double-digit gains at many Gulf trading points, alsofailed to provide much of a boost for futures Friday.

Looking ahead, traders will likely have their hands full againthis week with the Wednesday afternoon release of fresh storagedata. Already, two schools of thought forming. Storage bullsbelieve that this week’s figure will pale in comparison with lastweek’s shocking 97 Bcf refill and the market will be pushed higheras a result. Alternatively, storage bears contend this week’sfigure will eclipse last year’s 78 Bcf thus narrowing theoft-quoted year-on-year deficit (currently at 428 Bcf) for thesecond week in a row. Interestingly, the average of the last sixinjections is 77 Bcf and twice during that period 78 Bcf has beeninjected in a week, according to the AGA.

“Some traders also seemed quick to reject last week’s 97 Bcfjump in AGA storage as significant, apparently not convinced thatit might be part of a trend.” New York-basedPegasus group wrote inits NatGas Report Friday. “Time will tell, but we remain concernedthat comparisons with last July’s record heat will continue toplace downward pressure on prices.”

Pegasus may have a point because year-on-year comparisonsbetween both temperatures and storage are compelling. According tothe National Weather Service’s degree day cooling data, July 1999was 14% warmer than average and 25% warmer than this year so far.And those hot July 1999 temperatures were felt on the supply size.According to the AGA, the market only managed to inject a littleover 7 Bcf a day or 50 Bcf a week last July, while the five-yearaverage refill for the month is almost 10 Bcf a day or 67 Bcf aweek.

This week last year the market injected 78 Bcf, followed byanemic refills of 41, 26, and 45 Bcf in the weeks to follow. Itgoes almost without saying that unless abnormally hot weatherarrives in a hurry, the market will have an easy time surpassingthose figures this year.

And according to the National Weather Service, no such weatheris on the horizon. Below-normal temperatures are expected for theentire Northeast, Mid-Atlantic and Eastern Great Lakes region alongwith the Pacific Northwest and desert Southwest. Above-normaltemperatures are predicted across roughly the middle third of thecountry from Montana and the Dakotas to the Gulf Coast.

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