Natural gas futures and commodity-related exchange traded funds slumped Thursday after inventory levels unexpectedly expanded last week. Nevertheless, gas prices could inch higher if the sweltering heat persists and fuels A/C demand.

The United States Natural Gas Fund (NYSEArca: UNG) plunged 4.3% Thursday. UNG rose 5.0% over the past week and was up 5.2% over the past month.

Nymex natural gas futures decreased 4.6% Thursday and is now trading around $2.8 per million British thermal units.

Natural gas futures were pulling back after the U.S. Energy Information Administration revealed that stored natural gas inventories increased by 65 billion cubic feet for the week ended August 7, compared to analysts’ projections of a 55 bcf rise, reports Christian Berthelsen for the Wall Street Journal.

Overall inventories were at 2.912 trillion cubic feet, or 2.8% above historic averages.

“The data will be a test for the market after the recent rally,” Citigroup analyst Tim Evans told the WSJ, adding that the recent data was a bearish surprise.

The unexpected jump in inventory levels caught traders off guard as many were pushing up prices since the start of August in response to forecasts for hotter weather, which is expected to fuel demand for gas-fired electricity to power air conditioners across the U.S. The natural gas market has remained range bound, trading between $2.5 and $3 per million Btus.

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