Natural gas futures were higher for the fourth-straight session Wednesday as traders continued to eschew the short side of the market in light of the tropical storm lurking in the Caribbean and another potentially bullish storage report scheduled to be released Thursday. The August contract rallied to close at $5.52, up 1.7 cents for the session and nearly a half-dollar more than its $5.08 bottom of a week ago.

Having been burned by the rally that followed last Thursday’s storage report, traders were careful not to bet too heavily ahead of this week’s release from the Energy Information Administration (EIA). Last Thursday the market rallied on the news that a smaller-than-expected 97 Bcf was added to underground storage facilities during the prior week. Not only did the 97 Bcf refill fall short of expectations centered on a 105-115 Bcf build, it also paled in comparison with recent injections of 127 Bcf and 114 Bcf.

Looking ahead, an injection figure in the expected 95-100 Bcf range would be open to interpretation. While it would seem bullish compared to the recent average refill rate of 113 Bcf, it could also be construed bearish because it still would exceed last year’s 67 Bcf refill. The EIA will release the data at 10:30 a.m. EDT.

With injections thus far this season running at 3-4 Bcf/d above average, most analysts think that storage will reach the 3,000-3,100 Bcf comfort level by the beginning of the heating season in November. However, those expectations are predicated on the assumption that there will not be sustained disruptions to Gulf of Mexico production this year. Last October an estimated 90 Bcf was knocked off the market during a four-week period by the one-two combination of Hurricanes Isidore and Lili.

While she is not nearly as strong as her 2002 predecessors, Tropical Storm Claudette was getting some attention Wednesday as she headed toward Mexico’s Yucatan Peninsula sporting a maximum sustained wind of 65 MPH as of 5 p.m. EDT. Although still a relative long-shot to impact natural gas production in the Central Gulf of Mexico, Claudette was enough to convince traders to wait a day to take profits on their long positions.

Also in bulls’ favor is the uncertainty over what exactly Federal Reserve Chairman Alan Greenspan will say when he addresses the Senate Energy Committee on the domestic natural gas supply situation Thursday. In May, when Greenspan first signaled the alarm over a perceived natural gas shortage, the futures market popped 14 cents higher (see Daily GPI, May 22). But in June the market could only muster a 1.6-cent uptick following Greenspan’s warning that the U.S has a long-term natural gas supply problem (see Daily GPI, June 11).

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