In tandem with heavy losses in the nearby crude oil and related products markets, natural gas futures shifted lower Wednesday as traders weighed the impact that fuel switching could have on prices this winter. The latest storage report from the American Gas Association (a 7 Bcf injection) rocked prices first lower and then higher, before the December contract finished the session back in the middle of the its daily trading range, down 4.4% at $2.676. December crude oil futures finished with an 8.6% loss at $19.80, its lowest close on a spot month basis since July 1999.

According to the AGA, 7 Bcf was added to underground storage facilities for the week ending Nov. 9, bringing working gas levels to 3,107 Bcf. The refill was bearish, not only compared to last year’s 6 Bcf withdrawal, but also against the range of expectations in the +/-5 Bcf range. The 7 Bcf injection followed last week’s 10 Bcf refill, and the five-year average is a 3 Bcf injection. Storage now stands 365 Bcf above year-ago levels, down from the 471 Bcf peak surplus of a little over a month ago.

The Producing Region and the Consuming Region West notched injections of 9 Bcf and 1 Bcf, respectively, and that was countered with a 3 Bcf net withdrawal in the Consuming Region East. Storage stands at 94% full.

Sources polled by NGI were a little surprised the market was able to rebound slightly to finish the session higher than where it was prior to the AGA release. For them, the relatively large injection does not bode well for a sizeable withdrawal — if any–next week. A year ago from next week the AGA announced a whopping 94 Bcf withdrawal and the five-year historical average for the week is a 61 Bcf withdrawal. Thomas Driscoll of Lehman Brothers in New York anticipates a 10 Bcf withdrawal this year (to be announced next Wednesday).

However, all may not be lost for bulls. Ending a string of incredibly bearish weather reports, the National Weather Service released a intermediate-range weather outlook yesterday a little more consistent with longer-range outlooks calling for a cold winter. In their latest six- to 10-day forecast, the NWS looks for a large swath of below-normal temperatures to invade the entire Eastern U.S. with the exception of New England, which along with the Central Plains, can expect normal mercury readings. The Northwest quarter of the country meanwhile, is expected to continue to bask in above-normal temperatures.

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