After pushing higher in early Thursday trade, the July natural gas futures contract — in its first regular session action as the front-month contract — reversed course temporarily following news from the Energy Information Administration (EIA) that 104 Bcf was injected into underground storage for the week ending May 21. However, futures rallied back to record a high of $4.312 before closing the regular session at $4.294, up 11.5 cents from Wednesday’s finish.

Prior to the 10:30 a.m. EDT report, the July contract shot up to a high of $4.300, but immediately following the slightly larger than expected build, the prompt-month contract recorded a low of $4.154. The dip proved to be short-lived as the contract returned to the upside shortly after.

“The 104 Bcf was above the consensus expectation level and also bearish relative to the 94 Bcf five-year average for the date,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “This may not be a large shock to the market, but it does tend to confirm an ongoing background supply/demand surplus, with the rising year-on-five-year average surplus maintaining downward pressure on prices.”

United-ICAP’s Brian LaRose was watching the $4.300 to $4.385 resistance zone closely on Thursday. He noted that if futures are able to close above it in the near future, then the $4.625 to $4.688 price range would be his next objective.

Ahead of the report, the industry appeared to be expecting an injection just on either side of 100 Bcf. A Reuters survey of 25 industry players produced a 93 Bcf to 110 Bcf injection range with an average expectation of a 101 Bcf build, while Bentek Energy’s flow model projected a 98 Bcf injection. Evans was on the record with a 110 Bcf estimate.

The actual build split last year’s 105 Bcf injection for the week and the five-year average injection of 94 Bcf.

As of May 21, working gas in storage stood at 2,269 Bcf, according to EIA estimates. Stocks are 71 Bcf higher than last year at this time and 318 Bcf above the five-year average of 1,951 Bcf. For the week the East Region injected 55 Bcf and the Producing and West regions added 31 Bcf and 18 Bcf, respectively.

The injection also came in higher than Credit Suisse analyst Teri Viswanath’s 99 Bcf estimate. She noted that the cash market’s strength likely kept the upward pressure on futures prices.

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