After failing to successfully probe the downside, natural gas bulls took control Thursday at Nymex following the news that only 80 Bcf was injected into underground storage facilities last week. At 12:45 p.m. EDT the June contract was up 22.5 cents for the session at $5.885. It closed at $5.772, 11.2 cents above Wednesday’s close. With 96,927 contracts changing hands, trading volume was heavy.

According to the Energy Information Administration, 80 Bcf was added to underground gas stocks last week, bringing total U.S. storage inventories to 821 Bcf. The refill was considered bullish as it fell near the bottom of expectations centered on a 80-96 Bcf refill. However, versus last year’s 39 Bcf injection and the five-year average build of 62 Bcf, the 80 Bcf addition seen Thursday was undeniably bearish. Storage is now 824 Bcf less than last year at this time and 545 Bcf less than the five-year average.

For George Leide of New York-based Rafferty Technical Research, the 80 Bcf storage injection was slightly bullish, because a refill of 86 Bcf had been built into prices already. “We saw a quick rally, but the buyers ran out of steam and sellers were quick to take profits,” he explained. At 10:45 a.m. EDT, June futures were back down to unchanged for the session at $5.66. Prices drifted lower from that point, but sellers lacked confidence and that was enough to give the bulls another shot at the upside. This time they made good on the opportunity, propelling the June contract to levels not seen by a prompt contract since mid March.

Looking ahead, Leide is reticent to call for a break above more sturdy levels of resistance just yet. “Gas feels fairly priced right now in the $5.31-91 area. Maybe a little high versus historical levels, but just about right considering the concerns over storage and summer heat…Also, we are in a shoulder month still and I would not expect a real break to the outside until we get our first real blast of hot weather.”

That being said, Leide said he would look to short the market at these levels. Should the market prove him wrong and continue higher, he would look to cover that position on a break above the April 21 high in June futures of $5.91. “If we take that out, $6.25-40 would be the next objective,” he said. On the downside, minor support is seen at a key low off the June hourly chart Wednesday at $5.59. Major support exists at the $5.31 bottom of the breakout gap created by Monday’s $5.335 low.

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