For the third Thursday in a row, the natural gas futures market moved dramatically higher following a lower-than-expected storage injection figure. At 10:30 a.m. EDT, the Energy Information Administration reported that 37 Bcf was added to underground storage facilities last week, and by 10:40 a.m. the market was 15 cents higher for the session. From that point forward, natural gas futures battled slowly higher as follow-through buying slightly outmatched profit-taking. At $3.515, September finished up 24.1 cents on the day and just a few ticks below its new, eight-week high at $3.53.

According to the EIA, there was 2,657 Bcf of working gas in storage on Friday, Aug. 16. Stocks were 231 Bcf higher than the same time last year, and 307 Bcf above the five-year average of 2,350 Bcf. In the East Region, stocks were 92 Bcf above the five-year average following net injections of 35 Bcf. Stocks in the Producing Region were 157 Bcf above the five-year average of 638 Bcf after a net injection of 1 Bcf. Stocks in the West Region were 58 Bcf above the five-year average after a net addition of 1 Bcf.

In addition to falling well short of the 85 Bcf injection from a year ago, the 37 Bcf refill last week was less than the common range of market expectations centered on a 40-45 Bcf build. Last Thursday, the September contract gained 21.7 cents after the market learned that a lower than expected 53 Bcf was injected for the week ending Aug. 9. And the market advanced 8.5 cents the previous Thursday after the EIA said that a slim 33 Bcf was added during the week ending Aug. 2.

However, supply concerns were not the sole reason for the price spike Thursday morning. Also at work, traders agreed, was some very constructive technical factors, which prompted some influential locals to be conspicuous buyers Wednesday (see related story) and Thursday.

While the long-term trend is solidly in bulls’ favor, do not be surprised if prices correct lower between now and the weekend, warned Ed Kennedy of Pioneer Futures in Miami. “This market is overbought and a little ahead of itself. In addition to the chart gap in the $3.48-50 area, you have some pretty good selling waiting in the $3.50-52 area. In the longer term — probably October or November contracts — we will probably see $4.50 futures, but I am holding off my buyers at these levels. We should see a profit taking sell-off [Thursday] or [Friday],” he said. On the downside, support is seen at failed trendline resistance, which is now at the $3.13-14 level. Major support comes in at $3.05.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.