After trading lower in the overnight session, June natural gas bulls were dealt another small blow Thursday morning as the Energy Information Administration (EIA) reported that a healthy 87 Bcf was injected into underground storage for the week ended April 27. However, the horns were showing again in the afternoon as the prompt month recorded an $8 high before closing at $7.947, up 21.7 cents from Wednesday.

Trading at $7.615 just prior to the 10:30 a.m. EDT report, the prompt month dropped to a low of $7.530 in the minutes that immediately followed before rebounding. The June contract climbed methodically for the remainder of the session, touching $8 resistance once again just before settlement.

"Thursday morning, the market was squarely between the minor support and resistance numbers," said Steve Blair, a broker with Rafferty Technical Research in New York. "I'm not exactly sure what happened with the drop immediately following the report, but I am thinking that someone came in to sell some stuff and there was nothing there, so he hit a vacuum and the market bounced right back. The storage injection was in line with estimates.

"Because we touched the minor support numbers, I think we saw quite a bit of a technical bounce in the afternoon. If we do get through heavy resistance at $8.050, we have a pretty good gap till the next number up around $8.400. However, I am not convinced we are going to break $8.050 because nothing has really changed fundamentally."

Blair said the storage situation bears this out. "Inventories are what they are. If people want to make a comparison to last year and try to run this market up off of that, I say good luck," the broker said. "You can't compare stocks right now to last year because last year was such an aberration. I don't think it is a valid argument. I think the five-year average comparison is a much more stable measuring stick, and we still have quite a bit more gas than the five-year average level."

Blair also pointed out that natural gas "for the first time in a while" divorced itself from the crude market. "Natural gas was making its highs Thursday while crude was headed lower," he said. "Crude was in the red all day, so natural gas certainly wasn't taking its cue from it." June crude ended up closing 49 cents lower Thursday at $63.19/bbl.

"While the net injection is slightly over the consensus and above the 55 Bcf five-year average, the market basically saw this number coming and already had it largely discounted into the price," said Citigroup analyst Tim Evans just after the report's release. "The $7.50 level on June looks like the benchmark for further bearish price reaction. If that level holds, we think short-covering will send prices higher."

Other market watchers expected futures to key off of other variables. "An 87 Bcf injection was well within market expectations and, other than an initial flurry of activity (actually, the flurry of selling activity -- much like last week -- preceded the report by several seconds and making a significant if not questionable low in the process; self-fulfilling prophesy maybe), the market will take this report under advisement, throw one eye on crude et al., and likely then go on its merry (or not-so-merry) way," enerjay LLC broker Jay Levine said following the report.

Bentek Energy had projected an 86 Bcf build, while the Reuters survey of 23 industry players found an average expectation of an 81 Bcf injection. The ICAP options auction Wednesday afternoon came up with a consensus expectation of an 84.5 Bcf build. In addition to being well above the five-year average build, the actual 87 Bcf injection dwarfed last year's 56 Bcf build.

As of April 27, working gas in storage stood at 1,651 Bcf, according to EIA estimates. Stocks are 245 Bcf less than last year at this time and 266 Bcf above the five-year average of 1,385 Bcf. The East region injected 52 Bcf for the week while the Producing and West regions chipped in 25 Bcf and 10 Bcf, respectively.

Longer-term weather forecasts suggest continued robust injections. The Thursday morning 11- to 15-day forecast from MDA EarthSat shows above-normal temperatures stretching from Nevada to North Carolina. The forecaster said the weather models may be smoothing over data that suggest still warmer temperatures for the period.

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