In yet another display of resistance to moving lower, the natural gas futures market bent but did not break Thursday morning as another triple-digit storage injection (100 Bcf) put bulls on the defensive. They battled back, however, and armed with weather reports calling for snow in Michigan and a tropical storm in the Gulf of Mexico, were successful in repelling the selling surge.

The November contract closed at $4.686, up 0.9 cents for the session and 12.1 cents above its post-storage report low.

According to the Energy Information Administration, storage increased by 100 Bcf for the second week in a row last week, building gas stocks to 2,788 Bcf as of Sept. 26. Storage now sits just 55 Bcf less than the five-year average and 250 Bcf less than last year at this time. While those differentials may seem bullish on face value, they are way down from the 600 Bcf deficit to the five-year average and the more than 1,000 Bcf shortfall to last year that existed this spring.

Versus expectations centered on a 85-100 Bcf refill, the 100 Bcf was also price negative. The market has now stored 399 Bcf over the last four weeks — quite a feat considering that storage refills typically average in the 60-75 Bcf range at this time of year. With just 212 Bcf left to reach the 3,000 Bcf comfort level, weekly storage injections from now through the end of the month will need to average only 42 Bcf a week.

In spite of the overwhelmingly bearish storage news, the market held strong for the second Thursday in a row. Last week’s 100 Bcf report actually prompted some short-covering before prices headed modestly lower for the day. In trading this Thursday morning, the price action took the opposite tack, dropping lower initially on the news before rebounding to trade into positive territory.

While traders would not discredit the formation of Tropical Storm Larry in the Gulf as a contributing factor to the advance, most market watchers maintain that it is concerns over the upcoming winter that are stifling the sell-offs. Snow showers are expected in Michigan again Friday and unseasonably cool temperatures are expected across the much of the East through next week.

Looking ahead to next Thursday’s storage release, traders are interested to see exactly what impact the cool weather this week had on the market’s ability to store gas in the ground. According to John Gerdes of Southwest Securities, the impact of weather on storage injections is considerable and he calls for a 60 Bcf refill to be announced next Thursday. His estimation is based on calculations that the 70 total heating degree days forecast this week by the National Weather Service are 23% above this week last year, 27% above the six-year average and a whopping 46% above the total degree days notched last week.

The technical picture is also turning up, said George Leide of Rafferty Technical Research in New York. “These sell-offs are getting weaker and weaker. The market’s behavior both [Thursday] and last Thursday are signs the market is poised to go higher.” Specifically, Leide looks for a push past Monday’s overnight Access trading high of $4.98 to lead to a test of resistance at $5.08. That, coupled with a settle above $5.00 would turn the charts in a very positive light, he said.

In the shorter-term, Leide suggests being a little long from the $4.62-65 level to catch an updraft. A sell-stop placed down at $4.50 would limit losses should the market turn lower, he said.

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