The NYMEX August natural gas futures contract closed 8.5 cents higher at $3.847/MMBtu Thursday, a slight reversal from its recent decline after a mildly bullish weekly gas storage report showed injections below expectations.
For the week that ended July 18, the US Energy Information Administration reported an injection of 90 Bcf. Analysts had expected an injection of between 94 Bcf and 98 Bcf.
While the move higher came in response to the EIA report coming in below expectations, the data was bearish overall historically as the injection was almost double both the 43 Bcf build in the same week a year ago and the 46-Bcf five-year average.
"We got a little bit of a pop after the number came out," Price Futures Group senior analyst Phil Flynn said. "The selloff had been priced in and now we're going to get some of that back."
Flynn cautioned that the gas market is only halfway through the injection season and storage levels are 22% below average, leaving room for a variety of variables -- weather and hurricanes -- to move the market.
The small pop in the prompt-month price "would be the strongest upward move witnessed in July, a testament to how bearish this month has been," Gelber & Associates analyst Aaron Calder said.
"Lower gas prices are going to inspire increased natural gas demand," Calder said. "But a lack of overall cooling demand will still trump that and allow inventories to catch up to normal levels. The market is up on evidence of fuel switching, while cooler temperatures will continue to keep a lid on its upward potential."
The US National Weather Service's six- to 10-day forecast calls for cooler-than-normal temperatures in the eastern half of the US, including the large gas markets of Chicago, Boston and New York City, while warmer-than-normal-temperatures will dominate the western US.
August traded between $3.744/MMBtu and $3.886/MMBtu on Thursday.
