After dropping to a new two-week low on the heels of another in a string of bearish storage figures (95 Bcf injection), the natural gas futures market rebounded vigorously Thursday as traders continued to take a bullish view on the technical outlook. On its first day as prompt contract at Nymex, July futures finished 5 cents higher $6.066.

According to the Energy Information Administration, working gas in storage increased 95 Bcf to 1,085 Bcf during the week ending May 23. Stocks were 762 Bcf less than the same time last year and 508 Bcf below the five-year average of 1,593 Bcf. In the East Region, stocks were 274 Bcf below the five-year average following net injections of 63 Bcf. Stocks in the Producing Region were 227 Bcf below the five-year average of 537 Bcf after a net injection of 22 Bcf. Stocks in the West Region were 7 Bcf below the five-year average after a net addition of 10 Bcf.

While the shortfall versus historical numbers is certainly a bullish factor, traders were quick to anoint the 95 Bcf refill as bearish because it came in at the top end of refill estimates in the 90-95 Bcf range. Versus last year’s 72 Bcf addition and the five year average build of 73 Bcf, the 95 Bcf figure was also price-negative.

Following the string of hefty injections, analysts are beginning to take stabs at where storage levels might end the injection season on Nov. 1. Using the last four weeks as a gauge and assuming normal weather for the remainder of the season, Thomas Driscoll of Lehman Brothers in New York predicts storage will be 2,845 Bcf come November.

Kyle Cooper of Citigroup in Houston has also been impressed by the string of injection figures, noting the 95 Bcf seen yesterday was the largest refill on record for that given week. Moreover, should storage injections continue at the torrid pace exhibited by last week’s refill and weather remain “normal,” Cooper calculates that storage would reach the 3,145 Bcf level.

Although he is quick to couch that statement, saying that it is unwise to base an entire injection season on the basis of one number, he recognizes that demand is slipping. “[It demonstrates] to us that the market is functioning rather well by pricing out enough demand to reach satisfactory inventory level,” he wrote in a note to clients Thursday.

A rush of local and trade selling propelled the July futures contract down a dime to $5.81 in the five minutes following the 10:30 a.m. storage report. But just like similar moves down to the $5.80s, the market was quick to step in on the buy side and prices were quickly whisked higher. “We’ve seen buyers on the sidelines lately waiting for lower prices,” said George Leide of New York-based Rafferty Technical Research. “Looks like they jumped in on the move lower [Thursday],” he added.

Looking ahead, Leide feels that the support in the $5.80s will need to hold if the market wants to avoid a trip down to the $5.50 area. On the upside, he sees a fair amount of congestion in the $6.09-13 area, which corresponds with the gap on the July daily chart from Tuesday.

Craig Coberly of GSC Energy in Atlanta agrees that support in the low to mid $5.80s is important and contends that barring a break of that level, the market is on track for a retest of the $6.50 high from earlier this month. “Gann support is seen in the $5.80-85 area. A break lower would be negative, likely leading the market down to the $5.52-57 area. That would be the last line of defense,” he said.

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