Change was in the air right from the outset of natural gas futures trading Wednesday. After opening higher in three out of the last four sessions, gas futures gapped lower at the opening bell Wednesday amid a concert of fund and local selling. However, when it became apparent that last week’s lows in the mid $2.70s were unobtainable, the market reversed its direction and climbed through several key levels of resistance in the last hour of trading. The August contract gained 15.3 cents to close at $3.042, its highest daily settle since July 3. At 151,295, volume was extremely heavy.

Sources said trade buying, particularly that of El Paso Corp., formed the foundation of Wednesday’s mid-morning rally.

Citing what he felt were good values earlier in the session, Paul Lawing of North Carolina-based National Gas Distributors, admitted to being a buyer Wednesday morning on a dip by the August contract into the low $2.80s. As it turned out, he picked the bottom because by about 11:15 a.m. EDT, the prompt month had started its price ascent.

“The market really started to move on a break of $2.92,” added Peter Hattersley of Rafferty Technical Research in New York. “We took out $2.92, then $3.00, then $3.03 and kept right on chugging. The big test now will be support at $3.080-115. A break of that level would confirm the $2.75 level as a major bottom.”

In evening Access trading, the August contract was well on its way. By 5 p.m. it was 2.8 cents higher at $3.07, a new, two-week contract high. However, don’t look for the market to bust through resistance at $3.080-115 on its first test of that level, continued Hattersley. “You have to be a seller up there until it clears $3.115.”

However, technical considerations were not entirely responsible for the run-up. Also at work was sympathy buying in natural gas following a crude run-up of nearly 60 cents Wednesday. Add to that the impact hot weather forecasts and lowered storage injection expectations heading into Thursday’s report and you had the recipe for a price rise, sources said.

Storage injection estimates have ranged from as high at 65-70 Bcf to as low as 45 Bcf, but traders note that they are now hearing more injection estimates in the lower half of that range. For example, Tom Saal of Pioneer Futures in Miami calls for a 54 Bcf refill and John Wassam of Advest Inc. in New Hampshire looks for a 45-55 Bcf addition. Last year, the industry posted a 77 Bcf weekly injection, and the five-year average increase for the week is a 66 Bcf injection. The EIA will release its report at 10:30 a.m. EDT Thursday.

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