Similar to other recent forays above the $3.00 mark, Wednesday’s price surge in the natural gas pit at Nymex was short-lived as locals and speculative accounts liquidated new longs and reinitiated short positions. After topping out at $3.04 at 10:15 a.m. EDT, the September contract shuffled lower throughout the session, ending down 6.5 cents at $2.91. Estimated volume was moderate, with 93,329 contracts changing hands.

Several traders were surprised by the weakness in natural gas despite relative to the strength in the nearby crude oil pit. September crude finished at $28.15, up 25 cents for the session following the American Petroleum Institute’s Tuesday release showing U.S. crude oil inventories decreased by 9.5 million barrels last week.

However, the natural gas market has been largely unaffected by moves in crude oil recently, as natural gas traders search for fundamental factors in their own market. On Wednesday, that meant they were looking at weather forecasts and physical prices for clues to the next price leg. Cash prices tumbled at some delivery locations Wednesday as traders battled the heat with incremental withdrawals from storage (see related story this issue). That weakness, coupled with the potential for moderating weather next week in the center of the country, was good news for bears Wednesday.

While still calling for above-normal temperatures in much of the eastern and central portions of the United States, the National Weather Service predicts cooler air to descend upon the western third of the country beginning early next week. Normal readings are expected in the southeast corner of the country, as well as Northern California and eastern sections of Washington and Oregon, the NWS revealed in its latest six- to 10-day forecast.

However, weather, crude oil prices and cash market prices will take a back seat to storage Thursday morning when the Energy Information Administration releases its weekly supply data. Following another confusing revision last week in which the EIA ratcheted downward the amount of gas in storage by 12 Bcf, refill expectations this week vary from as little as 44 Bcf to as much 75 Bcf.

Citing the 95 Bcf injection realized back in June, which is the last time temperatures were as cool as they were this last week, Tim Evans of IFR Pegasus in New York calls for an injection in the 70-75 Bcf range, which if realized would easily exceed the 46 Bcf tally seen a year ago. On the lower end of the scale, Tom Saal of Pioneer Futures in Miami looks for a 44 Bcf refill and adds that it looks like weekly injections should continue to fall below last year.

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