After a misguided attempt to rally Thursday morning, natural gas futures moved lower as traders pieced together a mixed bag of data released by the Energy Information Administration (EIA). The June contract was hit with two waves of local and fund trader selling — one following the 10:30 a.m. EDT storage report and the other near the 2:30 p.m. closing bell. The June contract suffered the greatest loss, dipping 18.3 cents to close at $6.131.

According to the EIA, 72 Bcf was injected into underground storage facilities last week, bringing reserves up to the 900 Bcf mark. Versus expectations centered on a 74-85 Bcf build, the 72 Bcf figure was bullish. Contrasted with historical figures, the injection was neutral, falling between last year’s 62 Bcf addition and the five-year average refill of 75 Bcf.

The EIA also said Thursday that it had revised upward last Thursday’s injection figure by 7 Bcf to 87 Bcf due to a resubmission of data by one or more of its survey respondents. Because last Thursday’s reported 80 Bcf refill had fallen near the bottom end of market expectations, natural gas futures soared at the end of last week, setting the tone for this week’s continued price strength. Upon the realization that last week’s figure should have been an 87 Bcf build, traders were quick to lighten their long positions.

In response to industry criticism, the EIA last summer discontinued the practice of issuing corrections based on its estimation procedure. However, the administration said it would continue to make revisions at regularly scheduled times in the event survey respondents reported changes that caused the estimated level of working gas to move by 7 Bcf or more.

Prior to Thursday’s storage report, rumors about the revision had circulated in the market. However, most market watchers chalked that up to local traders looking for a reason to explain the near $1 price increase over the past 10 days. As it turned out, the rumors for a downward revision were scintillating enough to entice buyers to bid the market higher just ahead of Thursday’s 10:30 a.m. report. When the actual report — showing an upward revision — was released, they quickly liquidated those longs, traders said.

That selling had a profound impact on prices because of what traders called the 10:28 vacuum. Fearing an adverse price move following the storage report, traders often lift their buy and sell orders placed on either side of the prevailing market price. As a result, there is a virtual vacuum on either side of the market when the storage number is released and anyone who needs to buy or sell may find a lack of willing counterparties. This was never more evident than Thursday, when sellers pushed prices down 19 cents in the five minutes from 10:30 to 10:35 a.m. EDT.

Although prices dipped Thursday in reaction to the upward storage revision, the market is far from being out of the woods. “Assuming normal weather, we continue to believe that the goal of reaching the 3,000 Bcf comfort level by Nov. 1, 2003 is highly unlikely given the increased level of nuclear maintenance activity this spring — and more importantly — ongoing concerns surrounding the availability of nuclear generation capacity this summer,” wrote UBS Warburg analyst Ronald Barone in a note to clients Thursday.

Based on the weather thus far this week, Barone predicts next week’s storage figure will likely be similar to the 68 Bcf injection seen a year ago. Looking further into the weather crystal ball and considering the next three year-ago weekly storage injections of 72 Bcf, 107 Bcf, and 88 Bcf, Barone does not expect the often quoted year-on-year on year deficit — currently at 807 Bcf — to move outside of the 750-850 Bcf range between now and early June.

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