September natural gas futures briefly rallied Thursday following the release of seemingly supportive inventory data but quickly reversed and ended up in the loss column. September futures fell 14.3 cents to $3.336 and October lost 9.4 cents to $3.673. September crude oil rose 36 cents to $70.52/bbl.

“We got a pop in the market because we were expecting a build of 65 to 70 Bcf and got 63 Bcf,” said John Woods, senior trader at Integrity Energy in New York.

He added that “we are just waiting on formations of storms, weather patterns and those kind of things. I don’t think $3 is within sight because the market has to prove itself [that it will still work lower]. You still have the chance of getting a surprise, a storm or something like that. If you short the market around $3, what are you looking for? What’s the risk/reward? You get short at $3, you better hope you get $1.50 gas.

“On the flip side until the market proves it can advance, you are going to sell a $3.90, $4, to $4.15 mark,” he added.

Traders attuned to the vagaries of the economy saw the bullish case lose some of its luster as the 8:30 a.m. EDT Thursday release of July retail sales data by the Commerce Department came in worse than anticipated. Expectations had been for a gain of 0.8% on the strength of the “cash for clunkers” program, but the actual figure came in at a disappointing minus 0.1%. July retail sales had posted a 0.6% improvement. Equity bulls, however, shrugged off early market weakness and the Dow Jones Industrial Average posted a gain of 36 points to close at 9,398.

Tropical Depression Two continues to lose strength. At 11 a.m. EDT Thursday the National Weather Service (NWS) reported that TD Two was 885 miles west of the Cape Verde Islands but was moving at only 9 mph. Maximum sustained winds had slipped to 30 mph and little change in strength was expected during the next 48 hours. “Satellite imagery indicates that only a few showers and thunderstorms are associated with the depression. If this trend continues, the system could decay to a remnant low pressure area [late Thursday],” NWS said.

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