While Wednesday's Energy Information Administration (EIA) report that 19 Bcf was injected into inventories for the week ending Nov. 5 came in below historical comparisons and most industry expectations, the injection did set a new all-time record for natural gas in storage at 3,840 Bcf, which the natural gas futures market took note of.

With the storage report being dubbed both bullish or bearish depending on an individual's perspective, traders also had to digest weather forecasts that are calling for widespread below-normal temperatures over the next few weeks. The bears appeared to win this round. After trading in a wide $4.018 to $4.249 range, December natural gas futures ended up closing out the regular session at $4.046, down 16.4 cents from Tuesday.

After trading down to $4.108 in Wednesday morning trade, December futures temporarily perked up following the news that 19 Bcf was injected into underground storage. The prompt-month contract eased up to trade at $4.142 just prior to the EIA's noon EST report, which was moved up a day in observation of the Veterans Day holiday Thursday. Once the number hit the street, the December contract spiked to $4.220, but quickly reversed course to $4.072.

Wednesday's lower close halted the four-day rally, which had added 37.4 cents to the December contract through Tuesday's close.

Citi Futures Perspective analyst Tim Evans called the report "bullish" and noted that the storage trend would likely continue with colder temperatures ahead. "The 19 Bcf net injection to U.S. natural gas storage for last week was in the lower part of the range of expectations and supportive compared with the 29 Bcf five-year average," Evans said. "The context is also supportive since colder temperatures in the weeks ahead point to a swing to above-average storage withdrawals in the second half of November."

Heading into the report, Evans had been expecting just a 9 Bcf injection, while a Reuters survey and a Bloomberg survey were looking for 21 Bcf and 23 Bcf builds, respectively. In addition to being smaller than the five-year average, the actual 19 Bcf addition was also smaller than last year's date-adjusted 26 Bcf build for the week.

Stocks are now 31 Bcf higher than last year at this time and 342 Bcf above the five-year average of 3,498 Bcf. For the week, the Producing and West regions injected 15 Bcf and 4 Bcf, respectively, while the East Region stood idle.

The injection moved current inventories past last year's all-time record level of 3,837 Bcf, which was notched for the week ending Nov. 27, 2009.

Much of the recent improvement in futures has been predicated on anticipated heating load as well as short-covering by funds and managed accounts. Weather forecasters appear to agree that cold weather is coming, but the timing and placement is uncertain.

"The models continue in general agreement that North America will be trending colder relative to normal in the coming two weeks. But the details continue to fluctuate as the models vary on which pushes of cold air will be stronger and where they exactly track," said Matt Rogers, president of Commodity Weather Group of Bethesda, MD.

He added that the weather models "seem to show agreement on a stronger cold push -- the first polar air push of the season -- into the Midcontinent on day eight and then east and south from there. That cooling should moderate (weaken) as it moves east and south for days nine through 12. Then there are signs of a break in the cold before another potentially vigorous cold push enters the Plains on days 14-15."

Analysts see a continued focus on weather. "Colder temperatures, which were coming anyway, according to the calendar, are almost always the most bullish factors this market can have. Recently, traders seem to have started to factor these into their thinking, which would explain the recent rise in prices," said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm.

However, Beutel said Wednesday morning that he saw further price gains as an uphill struggle.

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