With a twist of irony that made even the most seasoned traders shake their heads, natural gas futures rebounded strongly yesterday afternoon, just moments after fresh storage data was released showing that the year-on-year storage deficit has finally been eliminated. With that the market broke a string of seven-straight Wednesday losses as traders propelled the new prompt month July contract up 17.1 cents to close at $3.981.

According to the American Gas Association, 99 Bcf was injected into underground storage facilities last week, bringing total working gas to 39% full at 1,281 Bcf. Heading into the report, traders were well aware that an injection greater than 92 Bcf would result in the a flip-flop from a year-on-year deficit to a year-on-year surplus. Storage now stands 7 Bcf more than year ago levels and just 27 Bcf less than the 5-year average.

Traders surveyed by NGI after the report was released said that the injection was a bit of a let down as most market watchers were looking for another triple-digit refill. The wide range of expectations called for a 90-120 Bcf injection, but most traders admitted that a 100+ figure was “in the market.” Leading up to yesterday, the prompt contract at Nymex had fallen an average of 13.8 cents over the course of the prior seven Wednesdays as traders were forced to choke down their weekly bear pill. During that period the market has effectively erased the deficit, which stood at 404 Bcf on April 4.

However, a slightly smaller than expected storage build was not the only thing pressing prices higher yesterday. Traders also were quick to point to severely oversold conditions as a reason for the price rally. Leading up to yesterday, the July had experienced losses in 10 of its last 11 trading sessions, resulting in a whopping 91.2-cent price erosion in a little over 2 weeks. After jumping 23 cents in just 5 minutes yesterday afternoon, the July contract plowed methodically higher into the closing bell as traders buoyed the market in an attempt to fill in the chart gap up to $4.01. As it turns out, they were successful and the July contract is adding to its gains in the overnight Access session. As of 7:00 P.M. (EST) the prompt month was an additional 7.4 cents higher at $4.055.

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