With Tomas being further demoted from a tropical storm to a tropical depression and the industry expecting a much larger-than-normal storage injection in Thursday report for the week ending Oct. 29, natural gas futures were back to probing the downside in Wednesday's regular trading session.

The December contract traded in a rather modest $3.790 to $3.900 range before closing the session at $3.836, down 3.4 cents from Tuesday's finish. However, traders and analysts will be watching the Energy Information Administration's storage report Thursday morning very closely, especially since it is all but certain that the current deficit to last year's record setting storage level will be wiped out and replaced with a year-on-year surplus instead. Last Thursday's report covering the week ending Oct. 22 revealed a 71 Bcf injection, which cut the year-on-year deficit to 1 Bcf while blowing out the year-on-five-year average surplus to 312 Bcf (see Daily GPI, Oct. 29).

"The natural gas market is on the defensive, with current cash market weakness and worry about an above-average storage injection in Thursday's DOE storage report...tugging the market to the downside," said Tim Evans, an analyst with Citi Futures Perspective in New York.

The analyst noted that the forward temperature outlook actually looks supportive though, with the 11- to 15-day forecast looking a bit cooler than on Tuesday, adding some heating demand. "This will accentuate what we think will be a shift from bearish to bullish storage flows, as well as the coming seasonal flip from net injections to net withdrawals, which could steer prices back to the upside," he said.

Evans added that the picture in the tropics is not as supportive, because while Tropical Depression Tomas may strengthen again, "unless the storm track shifts considerably it will remain a has-been as far as the natural gas market is concerned."

Turning attention to Thursday's 10:30 a.m. EDT storage report for the week ending Oct. 29, Evans said he is expecting a 76 Bcf build, which would be significantly larger than both last year's date-adjusted 28 Bcf addition for the week and the five-year average injection of 27 Bcf.

A Reuters survey of 25 industry players produced build expectations that spanned from 57 Bcf to 82 Bcf with an average call of a 67 Bcf addition.

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