December natural gas futures rose Wednesday in a quiet session punctuated more by trader anticipation of the extended holiday weekend than the release of bullish storage data or options expiration. At the close December had risen 4.5 cents to $3.460 and January had added 4.7 cents to $3.608. Oil and equity markets faltered. January crude oil dropped $1.84 to $96.17/bbl and with 45 minutes to the close the Dow Jones Industrial Average was down 163 points to 11,330.

The market mover of the day was the noon EST release of storage data by the Energy Information Administration (EIA). Bulls were treated to an injection figure well below expectations, but the market only managed to cobble together a modest gain.

For the week ended Nov. 18 the EIA reported a build of just 9 Bcf and December futures rose. Shortly after the figure was released December jumped to $3.483 but quickly started a leisurely slide. By 12:15 p.m. December was at $3.445, up 3.0 cents from Tuesday’s settlement.

Not only was the 9 Bcf figure far less than what traders and analysts were looking for, but the EIA revised the prior week’s figure downward from a 19 Bcf build to a 12 Bcf increase. “We were looking for a number between 19 to 22 Bcf and it came in at 9 Bcf, which is a bullish number, but the market only traded up 5 cents,” a New York floor trader said.

Before the release of the data a Reuters poll of 16 traders and analysts showed a 19 Bcf average with a range of 10 Bcf to 28 Bcf. Industry consultant Bentek Energy also estimated a 19 Bcf increase. Ritterbusch and Associates was looking for an 18 Bcf build, as was IAF Advisors in Houston. Industry consultant Bentek Energy expected a 19 Bcf gain, identical to the average of a Reuters poll of 16 analysts and traders. The less-than-expected build was still greater than last year and five-year average injections of a 7 Bcf pull, and Thursday’s report sent both comparisons well into positive territory.

“There wasn’t really much of a response to the number. It seems a lot of guys are already on the couch waiting for the football games to begin,” the floor trader said.

Citi Futures Perspective analyst Tim Evans noted that the release of government storage data had something for both the bulls and the bears to hang their hat on.

“The DOE reported a 9 Bcf net injection to U.S. natural gas storage for the week ended Nov. 18, bullish relative to market expectations and the downward revision to the prior total was also supportive,” Evans said. “That said, the 9 Bcf build for the week was still bearish relative to the five-year average 7 Bcf net withdrawal, with the year-on-five-year average surplus growing to 233 Bcf.”

With the slim storage build, other analysts are shifting out of a bearish market perspective. “While we view a record storage pace and a continued elevated rate of production as formidable obstacles to a sustainable price advance, we also view the smaller than expected supply build as providing additional ammunition for a further price advance next week,” said Jim Ritterbusch of Ritterbusch and Associates. He added that “the stage for such a rally had already been set by this week’s shift in the 1-2 week temperature views away from mild temperatures. And, although normal patterns through the Midwest and northeast regions don’t appear particularly bullish, they should prove capable of forcing some storage withdrawals following this month’s delayed seasonal peak. We are shifting from a short bearish to a neutral posture as we now feel that price lows were likely placed earlier this week at about the $3.28 area per December futures.”

Meteorologist John Dee in his forecast for 10-day U.S. heating demand sees no change from present subdued levels. “Mild temperatures in much of the nation will continue to lead to lower-than-average demands for heat. The only above-average demands will be across the Pacific Northwest and the northern Rockies, where temperatures will run slightly cooler than average. This mild setup looks to occur for most of the next week to 10 days.

“There are hints of some very cold air to invade the eastern half of the country next week, but I am not buying that idea just yet.”

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