Coming in below historical levels, but still within the range of industry estimates, the Energy Information Administration reported Thursday morning that 69 Bcf was injected into underground natural gas storage for the week ended Sept. 24. November natural gas futures closed at $6.795, down 11.6 cents on the day.

After taking a wild 98-cent ride higher over Tuesday and Wednesday (see Daily GPI, Sept. 30), the November futures contract on Thursday morning dropped 18 cents from pre-report levels to trade at $6.67 as of 10:38 a.m. (EDT). While the prompt month staged a rebound off of that mark, it was repelled by the psychological $7 mark just after noon.

Commenting on Thursday’s action, Commercial Brokerage Corp.’s Tom Saal pointed out that even though November was down, the four remaining winter months were up on the day. He added that the 11.6-cent drop in November futures wasn’t a huge retracement. “I think we could still go higher overall, although I can’t believe I am saying that,” he said.

Looking for reasoning behind Tuesday and Wednesday’s run-up, Saal said, “When in doubt, blame the funds. I am kind of still scratching my head a little bit. We were thinking we might get a pre winter rally, but I didn’t know we would get a pre October rally. I really think Ivan threw a monkey wrench into the downtrend due to production shut-ins, which are still occurring.

“That kind of stopped the physical market from going lower price-wise,” he added. “Once it stopped trending lower, the funds who were short came in and bought back their positions and there was a lack of sellers. I think lack of sellers is the key phrase there.” Saal noted that once producers see higher natural gas and oil prices, they develop a reluctancy to hedge.

While some had expected the brunt of Hurricane Ivan’s shut-ins in the Gulf of Mexico to be more evident in the report, most market watchers still came close to predicting the number.

Tim Evans of IFR Energy Services was calling for a 70-80 Bcf net injection, while Citigroup’s Kyle Cooper was looking for a build between 68 and 78 Bcf. The EIA’s number for the week falls below last year’s 101 Bcf injection and the five-year average build for the week of 74 Bcf.

Working gas in storage now stands at 3,011 Bcf, according to EIA estimates. Stocks are 191 Bcf higher than last year at this time and 183 Bcf above the five-year average of 2,828 Bcf. For the week, the East region contributed 48 Bcf, while the Producing and West regions each chipped in 12 Bcf and 9 Bcf, respectively.

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