While the 57 Bcf injection into natural gas storage for the week ended June 13 was well under historical comparisons, it appears traders were expecting an even lower build Thursday morning as July natural gas futures sunk following the 10:35 a.m. EDT report from the Energy Information Administration (EIA). The prompt-month contract closed Thursday’s regular session at $12.861, down 34.9 cents from Wednesday’s close.

After working as high as $13.350 just prior to the storage report, July natural gas plummeted to $13.050 just a few minutes after its release. The front month recorded the day’s low of $12.625 just after noon and traded sub-$13 for the rest of the session.

“The 57 Bcf net injection was slightly low compared with consensus expectations and is also well below the 90 Bcf five-year average figure,” said Tim Evans, an analyst with Citi Futures Perspective. “The context though may be less bullish as the upcoming reports will be more neutral than this one.”

The free-fall in crude futures Thursday surely did not hamper the decline in natural gas values. July crude dropped $4.75 on the day to close at $131.93/bbl. Even while crude prices were making a big splash, most of the eyes in the natural gas market arena were focused on the reaction to the storage report.

“I think the market was looking for a low injection and they ended up getting one,” said Tom Saal of Commercial Brokerage Corp. in Miami. “The expectation might have been that the number was going to be even lower. When the market is moving virtually straight up, there has to be some weak length in there from some ‘johnny-come-lately’ kind of buyers who think the market is going to go a lot higher. I think those people are bailing out here.”

Perplexed by the recent run-up in commodity prices, Saal joked that he has finally identified the reason for the jump. “The real driving force behind these historically high prices of the last few months is the fact that we have a full moon,” Saal said. “I have heard so many explanations for the running up of these prices over the last three or four months. I have heard them all, and it is now to the point where they are being recycled. The full moon theory is one of the only things I haven’t seen in print yet.”

Forecasting near-term price action, Saal said he believes the market will see if there is some follow-through to the downside. “You have to remember that commodity markets usually go down faster than they go up, so we might see that down the road here,” he said. “It comes down to being able to pick your spot. We are at pretty high prices on any historical comparison.” The broker said support resided at $13.050 and $12.900, but both were broken following the storage report. Below that, Saal had support at $12.835, which was pierced during the day by the July contract, but not settled below. As for resistance, he sees selling coming in at $13.373.

Going into Thursday morning’s report, Evans said he expected a 70 Bcf injection, while a Reuters survey of 21 industry players produced a range of injection estimates from 51 Bcf to 78 Bcf with an average build expectation of 62 Bcf. Golden, CO-based Bentek Energy hit the nail on the head with a 57 Bcf injection expectation. The number came in well below the 90 Bcf injection recorded last year for the similar week, which also happened to be the five-year average injection number.

Last week’s stifling heat and humidity in eastern energy markets prompted above-normal use of natural gas for electrical generation, but traders will have to balance that with the return of the Independence Hub, a deepwater Gulf of Mexico production facility that began ramping up production to its 900 MMcf/d capacity in early June.

Last week’s eastern heat was numbing and caused sharply higher occurrences of cooling degree days (CDD). For the week ended June 14 the National Weather Service reported that New York, New Jersey and Pennsylvania endured 82 CDD, or 60 more than normal. Ohio, Indiana, Michigan, Illinois and Wisconsin sweltered under 61 CDD, or 31 more than normal.

The EIA report was issued at 10:35 a.m. EDT, which is five minutes later than the report’s normal release. The government agency said earlier this month that the delayed release will continue until further notice to prevent early accessing of the report’s data.

As of June 13, working gas in storage stood at 1,943 Bcf, according to EIA estimates. Stocks are 376 Bcf less than last year at this time and 52 Bcf below the five-year average of 1,995 Bcf. The East region injected 38 Bcf and the West and Producing regions chipped in 12 Bcf and 7 Bcf, respectively.

On the hurricane front, meteorologists continue to keep an eye on a few areas of disruption down in the tropics. “Even though there are a couple of distinct waves traveling in the tropical Atlantic and the Caribbean, no tropical development is expected within 48 hours from any of these systems,” AccuWeather.com said on Thursday.

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