The nation’s natural gas storage deficit to last year’s record level was slashed by 10 Bcf on Thursday morning as the Energy Information Administration (EIA) reported that 73 Bcf was injected into underground stores for the week ended Oct. 5. After trading a couple of pennies on either side of $7 prior to the report’s release, November natural gas futures were pushed lower by the injection report — which revealed a larger injection than many expected — before closing out the day at $6.876, down 13.4 cents from Wednesday.

The November natural gas futures contract was trading at $6.990 just prior to the 10:30 a.m. EDT report. In the minutes that immediately followed, the prompt-month dropped to $6.875. After a noontime rebound to just above $7, the contract collapsed once again for good.

The injection was slightly larger than industry expectations and historical comparisons. A Reuters survey of 22 industry players was expecting an average build of 70 Bcf, while Bentek Energy LLC was calling for a 69 Bcf injection.

The actual 73 Bcf injection increased the current surplus over the five-year average to 237 Bcf and decreased the current deficit to last year’s record storage level to 44 Bcf. According to the EIA, 63 Bcf was injected into underground storage last year during the similar week and the five-year average build for the week is also 63 Bcf.

“The net injection of 73 Bcf is slightly above consensus expectations, but it’s not a big miss,” said Tim Evans, an analyst with Citigroup in New York. “It does add 10 Bcf onto the year-on-five-year average surplus, though, so it is clearly on the bearish side of the equation.”

Working gas in storage stood at 3,336 Bcf as of Oct. 5, according to EIA estimates. The East region injected 43 Bcf for the week, while the Producing and West regions added 23 Bcf and 7 Bcf, respectively.

According to Lehman Brothers analyst Daniel Guertin, the deficit to last year’s storage levels will likely be erased in the next couple of reports, allowing the United States to enter the winter heating season with record storage levels.

“Barring a shift to unseasonably cold weather in the last two weeks of this month, the current storage deficit to last year will switch back into a surplus in two to three weeks from now,” said Guertin. “October 2007 will end with record-high amounts of natural gas in storage, with end-October U.S. storage levels expected to be slightly higher than 3,500 Bcf.”

Current stocks are just 125 Bcf below last year’s 3,461 Bcf record, which was set in the storage report for the week ended Oct. 20, 2006.

The natural gas storage report found itself sharing the spotlight with petroleum Thursday morning as the liquid reports were delayed from their normal Wednesday release due to the Columbus Day holiday on Monday. Taken as a whole, some market watchers said the petroleum reports also proved to be somewhat bearish compared to expectations. While crude stocks dropped by 1.7 million bbl and distillates dropped by 600,000 bbl, gasoline stocks increased by 1.7 million bbl.

Despite the bearish petroleum report perception, November crude finished $1.78/bbl higher Thursday at $83.08/bbl.

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