NEW YORK (Dow Jones)--Natural gas futures ended slightly higher Wednesday on bargain buying, despite high levels of gas in storage and weak demand.

Natural gas for September delivery on the New York Mercantile Exchange settled 2.8 cents, or 0.97%, higher at $2.91 a million British thermal units after reaching a high of $2.915/MMBtu.

Traders were taking advantage of low prices to buy contracts, while market participants were trying to gauge whether gas futures prices, beset by slumping demand during the economic downturn and a supply glut, have reached a floor.

"All I know is that the action of the past few days thus far still suggests the market wants to try higher - maybe a lot higher," said Allen Rather, an independent energy analyst in Victoria, Texas.

A Commerce Department report Wednesday showing that orders for goods expected to last at least three years rose 4.9% in July, the biggest jump in two years, also supported gas prices. Gas traders have been watching economic data closely for signs of an economic rebound that could boost energy demand.

But abundant supplies continue to weigh down the gas market, despite expectations of a smaller-than-expected build in gas inventories for the week ended Aug. 21.

The U.S. Energy Information Administration is expected to report Thursday that 52 billion cubic feet of gas were added to storage during week ended Aug. 21, according to the average prediction of 18 analysts and traders in a Dow Jones Newswires survey.

The storage estimate falls short of last year's 100 bcf build in storage and the five-year average injection, which was 67 bcf. If the estimate is correct, inventories as of Aug. 21 will total 3.256 trillion cubic feet, 18% above the five-year average and 19% above last year's level.

Many analysts predict that U.S. gas storage facilities will reach full capacity before the beginning of the winter heating season, forcing production curtailments.

Gas inventories are "quickly approaching [a] train-wreck," wrote Michael Zenker, an analyst with Barclays Capital in New York, in a note to clients Wednesday.


FUTURES SETTLEMENT NET CHANGE
Nymex Sep $2.910 +2.8c
Nymex Oct $3.294 +0.6c
Nymex Nov $4.269 -0.8c

CASH HUB RANGE PREVIOUS DAY
Henry Hub $2.70-$2.83 $2.83-$2.91
Transco 65 $2.76-$2.88 $2.85-$2.98
Tex East M3 $2.99-$3.10 $3.20-$3.32
Transco Z6 $3.02-$3.09 $3.21-$3.37
SoCal $2.70-$2.81 $2.73-$2.89
El Paso Perm $2.63-$2.82 $2.65-$2.80
El Paso SJ $2.57-$2.66 $2.62-$2.70
Waha $2.68-$2.75 $2.72-$2.83
Katy $2.72-$2.80 $2.76-$2.85

-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com