Natural gas futures gained ground, making a somewhat counter-intuitive move following a report on inventory levels showing additions well above historical norms.

Following the release of government storage figures that were almost exactly what traders were expecting, the market advanced. The injection of 100 Bcf was in line with market surveys and independent analyst projections, and for the week ended June 27 the Energy Information Administration reported an increase of 100 Bcf in its 10:30 a.m. EDT release. August futures rose to a high of $4.408 shortly after the number was released and by 10:45 a.m., August was at $4.395, up 3.8 cents from Wednesday's settlement.

Prior to the release of the data, analysts were looking for a build right at 100 Bcf. A Reuters survey of 21 traders and analysts revealed an average increase of 100 Bcf with a range of 91 Bcf to 106 Bcf. IAF Advisors was looking for a build of 102 Bcf, and Bentek Energy's flow model anticipated an injection of 99 Bcf. Last year 76 Bcf was injected, and the five-year average is for a 68 Bcf build.

"We were actually looking for a 100 Bcf build, but this thing rallied. We were trading $4.35 before the number came out, and why it would have rallied is a mystery. It's still a triple-digit build, and we are stuck in this range. Nothing has really changed," said a New York floor trader.

Tim Evans of Citi Futures Perspective sees the number as "still bearish relative to the 68 Bcf five-year average for the date. The build was somewhat less than the 106 Bcf forecast from our own model, suggesting some minor tightening of the background balance in the market relative to the prior week's 110 Bcf build, but not a major change."

Inventories now stand at 1,929 Bcf and are 666 Bcf less than last year and 790 Bcf below the five-year average. In the East Region 65 Bcf was injected and the West Region saw inventories up by 16 Bcf. Inventories in the Producing Region rose by 19 Bcf.

The Producing region salt cavern storage figure increased by 3 Bcf from the previous week to 188 Bcf, while the non-salt cavern figure rose by 14 Bcf to 486 Bcf.