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Futures Work Higher Following Lean Storage Stats

Natural gas futures rose Thursday morning after the Energy Information Administration (EIA) reported an injection that was somewhat less than what the market was expecting.

After the EIA reported a 63 Bcf injection for the week ended Oct. 23 in its 10:30 a.m. EDT release, December futures rose to a high of $2.372, and by 10:45 a.m. December was trading at $2.355, up 5.7 cents from Wednesday's settlement.

Prior to the release of the data, analysts were looking for an increase in the upper-60 Bcf area. IAF Advisors estimated a 67 Bcf increase, and Ritterbusch and Associates figured on a 76 Bcf build. A Reuters poll of 21 traders and analysts showed an average 69 Bcf with a range of 62-85 Bcf.

“We had heard a build of 69 Bcf to 68 Bcf, somewhere in there," said a New York floor trader. "For support, you've got to be $2.25 on the downside in the December and $2.50 on the upside."

Analysts see the supply-demand balancing firming, at least a little. "The 63 Bcf build for last week was the second consecutive bullish-side miss versus expectations, suggesting that the background supply-demand balance may be firming," said Tim Evans of Citi Futures Perspective. "However, the market still faces upcoming warm weather that will translate into more robust injections, with the total still on track to clear 4.0 Tcf to set a new record."

Inventories now stand at 3,877 Bcf and are 409 Bcf greater than last year and 153 Bcf more than the five-year average. In the East Region 33 Bcf was injected, and the West Region saw inventories increase by 7 Bcf. Stocks in the Producing Region rose by 23 Bcf.

The Producing Region salt cavern storage figure was up 9 Bcf at 366 Bcf, while the non-salt cavern figure increased 14 Bcf to 986 Bcf.

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