With a lack of significant cold around the country and expectations of a healthy storage injection report Thursday, December natural gas futures on Wednesday continued to probe lower price levels. The prompt-month contract reached a low of $4.719 before closing the regular session at $4.725, down 19.7 cents from Tuesday’s close.

Despite record storage levels, some traders believe the upside is still vulnerable and that colder temperatures will eventually trigger the move.

“Futures have been grinding lower for the last week or so, and I think Wednesday’s action is just a continuation of that move,” said Tom Saal, a broker with Hencorp Futures LC. “That said, I think the spot contract low at $2.409 from back on Sept. 4 is safe. We definitely have a better shot of taking out the $6.240 high from Jan. 6.”

He added that fresh storage data arrives Thursday and most people are looking for a larger injection than last week, “so that could have promoted the futures weakness we saw Wednesday. On the weather front, we’ve had some forecasts for colder temperatures, but we haven’t seen any yet. I think this market is from Missouri, or the ‘Show Me State,’ so show me the weather and maybe the market will respond higher. I think traders are getting tired of reacting to forecasts.”

Taking a look at Thursday morning’s storage report for the week ending Oct. 30, most estimates are for an injection in the low 30s Bcf. A Reuters survey of 23 industry players produced an injection range of 20 to 45 Bcf with an average build expectation of 31 Bcf. Bentek Energy projects an injection of 34 Bcf, which would bring inventory levels to a record high of 3,793 Bcf. The injection report Thursday morning from the Energy Information Administration (EIA) will be compared to last year’s 23 Bcf build for the week and the five-year average addition of 29 Bcf.

“An injection of 34 Bcf will result in inventory levels within 98% of EIA demonstrated peak capacity of 3,889 Bcf. The West Region has exceeded EIA peak capacity by 6 Bcf, the Producing Region is within 7 Bcf of peak capacity and the East Region is 95 Bcf below peak capacity,” Bentek Energy said in its weekly storage note. “The current forecast is indicating mild weather for the next two weeks, possibly allowing for injections to continue into mid-November. Historically, the five-year average injections continue into the second week of November with an average build of 20 Bcf and 10 Bcf for the next two weeks. Given the current weather forecast, Bentek predicts stocks will end the season at a record 3.84 Tcf.”

Sneaking up behind all of the bearish fundamentals is the somewhat bullish arrival of a tropical storm in the southwestern Caribbean. AccuWeather.com Senior Meteorologist John Kocet said Wednesday that Tropical Storm Ida could threaten portions of the Gulf region as early as next week.

“From mid-September through October, the tropics were pretty much dead, but now there are signs of life,” Kocet said. “Wednesday, a tropical depression formed in the southwestern Caribbean. This disturbance is going to be hindered somewhat by its proximity to Central America, but it will also have access to heat energy stored in the ocean. When the storm will mature is not clear at this time. If the system stays over the warm waters of the western Caribbean, development will take place very quickly. However, a track partially over land could hinder development for several days. Regardless, this disturbance is a concern for the central or eastern Gulf region next week.”

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