After notching a brand new record prompt-month high at $14.75 in trading on Wednesday morning, November natural gas ended up retreating for the rest of the session, giving some traders the impression that a key reversal could be in the works. The prompt month ended up settling at $14.183, down 4.1 cents from Tuesday.

After testing higher early, November natural gas fell off in the afternoon, reaching a low of $14.12 late in the session before inching higher to settle. Shut-ins in the Gulf of Mexico continue to come down, which could be seen as supportive of the bears case. The Minerals Management Service (MMS) reported that shut-in gas in the Gulf fell approximately 275 MMcf/d to 6,895 MMcf/d on Wednesday.

“New highs are never bearish, but we suspect the run for buy stops here may have exhausted the upside vulnerability,” said Tim Evans, an analyst with IFR Energy Services. “A flush through mid-range support at $14.10 would put it back on the defensive.”

Others pointed out that a reversal could be in the making, noting the normal pattern of an aggressive spike just before the fall. “It is interesting to note that after making new all-time record highs in [November natural gas at] $14.75…a major reversal is potentially in the making,” said Jay Levine, a broker with Advest Inc. “It’s still too early to call, but the complex is showing continuing signs of wilting and uneasiness.”

A more fundamental analysis requires that the relationship to the crude oil and petroleum products market now be taken into consideration. “Natural gas does not historically trade at a premium to crude on an MMBtu basis,” said Kyle Cooper of Citigroup. “It is now significantly above crude, and it may not return to a more ‘normal’ relationship for some time.” He added that his bullish view of natural gas in relation to crude has definitely been tempered.

Of more immediate consequence to natural gas players is the Energy Information Administration’s (EIA) natural gas storage report for the week ended Sept. 30, which will be released at its normal 10:30 a.m. EDT on Thursday morning. Bears might be wise to cool their heels as some industry experts are expecting the injection to be pretty small due to the fact that the report covers the week following Hurricane Rita’s arrival.

Cooper is estimating a build of between 29 and 39 Bcf. “This would be a very bullish report on a temperature-adjusted basis. It will also likely establish a new weekly minimum (injection) for late September/early October,” he said.

A Reuters’ survey of 18 industry players is looking for an approximate 46 Bcf to be added to underground stores. The ICAP-Nymex storage options auction on Wednesday revealed a consensus forecast of a 36 Bcf injection. The number revealed Thursday morning by the EIA will also be compared to last year’s 79 Bcf injection and the five-year average build of 72 Bcf.

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