Natural gas futures prices were slightly lower Wednesday as traders awaited direction from U.S. gas storage data due out Thursday. Prices have been volatile in recent days, with one day's strong gains erased the next as the market handicaps near-term weather forecasts. Temperatures in the Northeast, mid-Atlantic and Midwest were expected to climb toward record highs approaching 100 degrees Fahrenheit this week. But forecasts call for a drop to below normal temperatures in the heavily populated Northeast from the weekend and into early July, while the temperatures in the Midwest and West stay above normal. Traders anticipate that the hot temperatures will spark greater demand for gas from utilities, which will need to provide more power to customers to run air conditioning units. Market bulls hope the weather can make a significant dent in the huge glut of gas in storage. The mixed picture from the weather had prices swinging on either side of unchanged in early trading. July-delivery natural gas futures on the New York Mercantile Exchange were 2.1 cents lower, at $2.524 per million British thermal units. It traded as high as $2.679/mmBtu overnight. "The Ping-Pong action in natural gas continues, as above normal conditions in the southern and central U.S. next week rallied prices strongly earlier today, only for them to panic and retreat again," said Matt Smith, analyst at Summit Energy. "The market remains undecided as to where to stand in this strong-supply, increasing-demand, tightening market, leaving it ultimately choppy and uncommitted," he said. The Energy Information Administration said gas in storage hit 2.944 trillion cubic feet on June 8, nearly 32% above a year earlier and 29.2% above the five-year level. The size of the gas glut relative to the five-year average has dropped to 666 billion cubic feet from 927 bcf at the end of March. The EIA's latest storage report, due out Thursday at 10:30 a.m., will set the tone for near-term prices. Analysts were puzzling out estimates Wednesday, with early calls in the range of a 57 to 64 bcf rise, compared with a five-year average rise of 87 bcf rise and a 90 bcf gain a year ago. "We are moving with the thermometer pretty much," said Phil Flynn, analyst at First Energy. "The weather is giving the perfect excuse to get the market going." Traders also were keeping an eye on a National Hurricane Center alert that a low pressure trough from the northwestern Caribbean sea northeastward to southern Florida has a low, 20% chance of becoming a tropical cyclone during the next 48 hours as it moves slowly northwestward into the southeastern Gulf of Mexico. Offshore U.S. gas output makes up less than 6% of total U.S. gas output, while total output from that area and the states of Texas and Louisiana account for 42% of the nation's supply, according to EIA data. Jim Ritterbusch, of Ritterbusch & Associates, said recent broad market swings "may well be sustained into next month given compelling arguments currently available to both the bulls and the bears. "The bulls can continue to focus on a contraction in the supply surplus that has been ongoing for several months and which is likely sustainable with the help of some above normal temperature forecasts," he said. "Meanwhile, the bears can continue to cite exceptionally high storage levels in absolute terms that would appear to provide ample supplies ahead of next winter even allowing for a hot summer and early start to the hurricane season." Write to David Bird at david.bird@dowjones.com

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