After being held to an extremely-tight, 6-cent trading range formuch of the trading session yesterday, natural gas futures cameunder a wave of selling pressure moments upon the release of freshstorage data and reacted by tumbling dramatically into the closingbell. Plumbing a new 5-week low at $3.91, the August contractfinished at $4.031, 22.6 cent lower for the day.

According to the American Gas Association, 97 Bcf was injectedinto underground storage facilities, bringing total working gaslevels to 1,733 Bcf or 53% full. Not only did the 97 Bcf refillexceed nearly all preliminary estimates, which ranged between 60and 90 Bcf, but it also was the largest build since 104 Bcf wassocked into the ground during the first week of June 1998.

While the large injection was bearish on its own merit, it mayhave received a little help by a new 5-year average column added tothe report by the AGA yesterday. By showing the 5-year average(1,894 Bcf) along side the level of storage at the same time lastyear, the AGA intent is to give people a little more information.”Last year there was an abnormally high level of working gas instorage compared to previous years and our information that we werepublishing on our report essentially invited that comparison andreally only that comparison,” said Chris McGill, director of gassupply and storage for the AGA.

While the comparison with last year showed a whopping 428 Bcfdeficit to last year, the shortfall to the 5-year average is only161 Bcf.

Despite the bearish storage report and the market’s quickreaction, a Houston-based risk manager is not convinced thebull-run is over. “All the stars were aligned in order to get 97Bcf in the ground. We had the was the 4th of July holiday, mildweather and cash prices below index gave people the economicincentive to stuff gas in the ground. We won’t see anotherinjection like that for the rest of the season,” he concluded.Furthermore, he was surprised by the lack of daily physicalsupplies turned back by Northeast utilities in the face of mildtemperatures across the region this week.

However, he was quick to temper his bullish stance by addingthat it will be difficult for the same traders who were just burnedon their $4.20 longs to turn around and buy back into the market.

And while the fundamental picture remains mixed, the technicalpicture got a little bit more bearish yesterday when the Augustcontract dipped below and settled beneath its 40-day moving averageat $4.156.

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