After extending to fresh four-week highs for the second session in a row Wednesday morning, natural gas futures prices shuffled lower in the afternoon in reaction to the news that a whopping 63 Bcf was added to underground storage facilities last week. The November contract finished almost 30 cents off its $2.69 opening trade, closing 17.4 cents lower at $2.418.

According to the American Gas Association, 63 Bcf was added to underground storage facilities for the week ending Oct. 12, bringing storage levels to 92% full at 3,042 Bcf. The refill was bearish, not only because it exceeded expectations centered in the 40-50 Bcf area, but also because it surpassed the five-year average refill of 46 Bcf. However, the most significant evidence was that last week’s net injection nearly doubled the 29 Bcf comparison from a year ago, stretching the oft-quoted year-on-year surplus to a new high at 471 Bcf.

The Eastern Consuming Region added 36 Bcf last week, down from the 46 Bcf injection the week prior. The Producing Region boosted its stores by 15 Bcf, just shy of the 19 Bcf refill the week prior. The big surprise came with the breakout for the Western Consuming Region, which showed a 12 Bcf injection, up from a net zero change the week prior. Not since the first week in August has the West experienced an injection of that magnitude.

However, for Jay Levine of Advest Inc. the market’s failure yesterday can not be blamed on the AGA data alone. Instead he points to a down-sloping channel, which after providing the market with support just a couple weeks ago, served as resistance yesterday. “Each time that channel has been tested, it has held and [Wednesday] was no exception,” he said.

Also of technical importance was November’s inability to spend any significant time above its 40-day moving average. At $2.69, November opened above its 40-day, but then quickly fell beneath it, encouraging traders to sell into the move lower.

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