Getting a slightly bullish boost from the Energy Information Administration’s (EIA) weekly gas storage report, July natural gas futures on Thursday closed up 7 cents at $6.485. The EIA reported that 85 Bcf of gas was injected into underground storage for the week ended June 18.

In anticipation of a low number compared to historical data, the prompt month traded higher prior to the release in a gamble that paid off once the report hit the street. Following the release, the prompt month hit a $6.55 high in morning trading before receding a little in the afternoon.

“Clearly, the little sell off we had starting back on June 17 is over,” a Washington, DC-based broker said. “We’ve basically retraced down about 50% of the little up move from June 9, and then it resumed back up again. I thought the market Thursday showed an appropriate response to the storage number we got. There was a little bit of a pop afterwards and then we worked off a little bit but still ended up positive on the day.”

The broker noted that the move down to $5.96 on June 9 was the bottom of the fourth wave down in the Elliot Wave counting system. “So now that puts us into an up wave, which is the [fifth] wave,” he said. “One of the projections could have us going back to $6.84, which would be a new high. In a more extreme scenario, it could move up to $7.41.”

The industry was all over the map with storage predictions for the week ended June 18, with some citing last week’s high generation levels and nuclear outages as reasons for storage injections to come in lower, resulting in a bullish impact on prices.

At least one analyst revised his storage estimate lower due to high generation numbers and the outages of the Palo Verde and Vermont Yankee nuclear plants last week. The storage build paled in comparison to both the 94 Bcf five-year average and last year’s 127 Bcf injection. As a result, this week’s report put the country back into a deficit to the 1,846 Bcf five-year average, albeit by only 1 Bcf.

However, some felt that all of the generation news and lofty historical numbers had already been factored into the market. Tim Evans of IFR Energy Services said prior to the release, “While we expect the 75-85 Bcf net injection to be fundamentally constructive relative to the 94 Bcf five-year average build, we think the market has already discounted this news via last week’s rally.”

Working gas in storage now stands at 1,845 Bcf, according to EIA estimates. Stocks are 280 Bcf higher than last year at this time. The East region led the injections once again, chipping in 58 Bcf, while the Producing and West regions contributed 17 Bcf and 10 Bcf, respectively.

As crude and natural gas prices continue to stay chummy, market impacting events such as continued unrest in the Middle East continue to affect both markets. Adding to the fray is the continuing strike in Norway by two offshore unions, which took a turn for the worse on Thursday.

In response to the strike, the Norwegian Oil Industry Association (OLF) said Thursday that it intends to impose a lockout on June 28, which could ultimately result in an almost complete shut-down of oil and gas production on the Norwegian Continental Shelf, where output is currently running at 3.3 million b/d of oil and 7.3 Bcf/d of gas. So far, strike action has seen production of around 400,000 b/d taken offline.

“The current situation could have significant repercussions for an already tight oil market where prices have recently eased following Saudi Arabia’s decision to increase supply,” Edinburgh, Scotland-based Wood Mackenzie said. “Norway is the world’s third largest oil exporter, behind Saudi Arabia and Russia, with an average of just over 3 million bbl/d in exports in 2003.”

The global energy consulting firm noted that in the past, situations similar to the current one have been resolved without significant supply disruptions with the Norwegian government stepping in to force a settlement.

The Washington, DC-based broker echoed that sentiment. “First of all, this is a business dispute, not a geopolitical dispute,” he noted. “The threat by management to lock out all the workers is part of an elaborate negotiation dance. The government can’t move in and mediate the situation unless it’s a big national emergency, so management orders the lockout.

“I think the reason that the crude market is not up $2 on the news that the third largest oil producer might turn its taps off is because it is a business dispute,” he said, adding that “it will get resolved. I don’t think this is a huge story because it’s not going to last a month-and-a-half. We’ve seen this before.”

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