In a session strikingly similar to last Friday, natural gas futures opened higher, only to shuffle lower throughout the morning Tuesday as traders elected to look past the hottest temperatures yet this summer to focus on the likelihood of bearish storage news to be released this afternoon. After gapping higher at the open, the September contract was unable to attract much in the way of follow-through buying. As a result, the prompt month tumbled 5.6 cents lower yesterday to take back gains achieved Monday and to close even with Friday’s settle at $2.971.

“This is a clear-cut case of [traders] looking ahead and not behind,” a source commented. “Today is the hottest day of the year for many people and cash prices are stronger. The futures market, however, is always one step ahead of the game and [traders] are already focused on the storage report.”

Expectations ahead of that report to be released at 2 p.m. (EDT) today are for a net injection of 70-90 Bcf, which would eclipse last year’s refill of 65 Bcf as well as the five-year average of 64 Bcf. Last week the American Gas Association announced a net build of 77 Bcf, which was only the second time in eight weeks the market had injected less than 100 Bcf into the ground. Storage is currently 283 Bcf more than last year and 182 Bcf more than the five-year average.

Heading into the report, most traders believe that the number is guilty of being bearish until proven otherwise. Accordingly, many traders are poised for prices to probe lower today ahead of the report. Support is seen at the confluence of recent lows in the $2.940-965 area from the September daily bar chart. In seven of the last 14 trading sessions, the market has tested but failed to break beneath that level during regular open-outcry trading. Only on one occasion in Access trading — Monday — did support in that area fail to hold, and even then prices fell no further than $2.91.

On the upside, resistance is seen at Friday’s and yesterday’s highs in the $3.095-100 area, which neatly corresponds to last Thursday’s $3.095 low. Technicians agree that a move back inside last Thursday’s $3.095-210 trading range could pave the way for a technical bounce to recent continuation chart highs in the $3.40s.

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