Natural gas futures are trading slightly better shortly after the regular session opening and before the release of the U.S. Energy Information Administration’s (EIA) weekly storage report at 16:00 GMT. The report will be released a day earlier than usual due to the U.S. holiday on Thursday.

Technically, the main trend is down, but the price action this week suggests aggressive counter-trend buyers may be trying to form a secondary higher bottom or a support base.

At 14:04 GMT, August natural gas futures are trading $2.265, up 0.025 or +1.12%.

U.S. Energy Information Administration Weekly Storage Report

This week’s EIA report is expected to show a larger-than-average build, but not of the triple-digit variety that traders have gotten used to this injection season. The consensus is for a build of 85 Bcf.

Bloomberg is predicting a median of 83 Bcf. Reuters is looking for an 85 Bcf injection, with a range of 76 Bcf to 94 Bcf. The ICE EIA Financial Weekly Index futures contract settled on Tuesday at 85 Bcf. ION Energy analyst Kyle Cooper called for an 87 Bcf build, and Natural Gas Intelligence’s model predicted a build of 88 Bcf. NatGasWeather is looking for an 80 Bcf build. This is leaning toward the bullish side.

Last year, the EIA report showed a 76 Bcf injection for the period, and the five-year average stands at 70 Bcf.

Short-Term Weather Forecast

NatGasWeather says for July 3 to July 9, “A hot US pattern through Saturday with highs of upper 80s to lower 90s from the Great Lakes to the Northeast, including Chicago and New York City. The Southwest will be hottest with highs into the 100s, although the nation’s strongest demand will be across the Southeast and Mid-Atlantic Coast as highs reach the mid-90s, while combining with high humidities to push the Heat Index into the 100s. The Northwest & North Plains will be mostly comfortable with highs of upper 70s to 80s. Demand will ease early next week as cooling arrives across the Midwest. Overall, demand will be high through Saturday, then easing to moderate.”

Daily Forecast

Bullish traders are hoping the EIA report shows a tightening as forecast. Then the focus will shift back to the midday weather forecasts, where they will be watching for hotter trends.

Holding $2.249 to $2.222 will indicate buyers are trying to build support. Taking out $2.364 will indicate the buying is getting stronger with $2.413 the first upside target.

The main range is $2.745 to $2.134. Its retracement zone at $2.440 to $2.512 is the primary upside target.

If $2.217 is taken out with heavy selling volume then we could see a retest of $2.134 over the near-term. But I think the EIA data would have to come in north of 90 Bcf in order to get this kind of reaction.