With almost 20% of the Gulf’s daily natural gas production still shut in, natural gas futures on Wednesday continued to trade in the upper $5s, despite a few bumps along the way. Trading volume was especially heavy as 140,516 contracts changed hands.

Despite dropping 19 cents from $5.70 to $5.51 at 1:46 p.m., the October futures contract was able to stage a rally before settlement. The prompt month closed at $5.629, up 2.1 cents on the day.

“In intra-day action, we started to sell-off and it looked like it was going to go lower pretty well, but then we had the 12-cent strong recovery into the close,” said a Washington, DC-based broker. He said day traders likely sold on profit-taking, but once they were done, the buying just came back in again.

“In the contracts that people were trading, there was some resiliency,” he said. “With damage in the Gulf worse than expected, traders pushed the winter months back over $7 again.” Three of the five winter months reached highs over the $7 mark on Wednesday.

While admitting that the extended Gulf production shut ins are the main influence on the market right now, the broker said there are also a number of winter forecasts being analyzed. However, many forecasts have differing opinions on what kind of winter is in store. He noted that while the government is calling for a fairly mild winter in the Northeast, the Farmer’s Almanac says otherwise. “It’s one of those things, pick your point of view and you can find a weather forecast to support it,” the broker said.

“The question is do people have concerns about the ability to supply what will be needed if we have a decent winter. That is always the case. Even if you go in with full storage, that doesn’t mean you can’t end up with price spikes.”

Commenting on the Energy Information Administration’s storage report scheduled for release at its regular time Thursday morning, the broker said it will be interesting to see what kind of impact the Gulf shut-ins will have. He noted that while there will be some impact on Thursday’s report for the week ended Sept. 17, there will likely be a much bigger impact on the report next week.

“The action today of taking a 20-cent hit and rebounding tells me that even if the number is bearish [Thursday], the market could still recover as well,” he said.

Many of the industry’s injection expectations fall within the 58 to 85 Bcf range. Thursday’s number will be compared closely to last year’s 100 Bcf injection and to the 82 Bcf five-year average build.

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