On the heels of fresh storage news and in sympathy with gains achieved in the nearby crude oil pit, natural gas futures rebounded from their morning lows Thursday as scale-down buying interest lifted the market to its first positive close since the New York Mercantile Exchange reopened for business last Friday. Buying was almost uniform across all contracts, with November edging out the rest of the strip with a 3.7-cent advance to close at $2.464. October followed not far behind, gaining 3.5 cents to finish at $2.137.

According to the American Gas Association, 90 Bcf was injected into the nation’s gas storage facilities last week, lifting supplies to 84% of full capacity. While some traders noted that the refill was bearish because it exceeded both last year’s 67 Bcf injection as well as the five-year average refill of 77 Bcf, others admitted that the injection was, if anything bullish because it fell near the lower end of the 85-100 Bcf range of expectations. The injection increased the year-on-year surplus to 432 Bcf, putting additional downward pressure on prices. By 11:40 a.m. EDT, the October contract had carved out a new all-time low down to $2.03.

At 2,757 Bcf, storage is well above last year’s 2,325 Bcf as well as the five-year average level of 2,509 Bcf. Working gas levels in the Consuming Region East rose to 1,554 Bcf, compared to a five-year average of 1,475 Bcf. Levels in the Producing Region reached 765 Bcf, or 80% full, and working gas in the Consuming Region West jumped 10 Bcf to 438 Bcf, or 87% full.

However, no sooner had bears set their sights on futures prices with a “1” in front of the decimal point than bargain buyers stepped into the market. The prompt month finished strongly, just off its $2.16 high for the day.

Traders said crude oil futures, which trade less than a stone’s throw from the natural gas pit and rebounded off their early-session lows, contributed to the strength in natural gas.

Looking ahead, most market experts believe there is still some downside left for natural gas — a market that has already tumbled an unprecedented 80% from its late-December high of $10. For Jay Levine of Advest Futures, the fundamental picture remains overwhelmingly bearish. However, he does not rule out a the market beginning to “flatten out” as it probes for the bottom of a downsloping channel on the daily chart. This being said, Levine suggests it might be prudent for end-users to explore long hedges,certainly on a scale down basis.

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