After trading the November natural gas futures contract within a slim 25-cent range on Wednesday, traders at the end of the session decided to put the market back where it began the day and await fresh storage inventory news Thursday morning. The prompt month ended up settling at $13.524, up half a penny for the day.

The prompt month notched its daily low of $13.365 early in the session and hit its peak of $13.615 later in the afternoon, before returning to nearly unchanged.

“Wednesday’s natural gas futures session was a kiss-your-sister kind of session,” said Tim Evans an analyst with IFR Energy Services. “We’ve climbed back up into the middle of the recent range and now we have to decide whether this is still a bull market or whether this recent rally is just an upward correction within a developing downtrend.

“There’s technical resistance here and failed support of $13.75. We’ve also got a 50% correction target at $13.725, so this is a place where a rally could potentially fail,” he said. “The market is being cautious here. We often do consolidate ahead of the storage inventory data going public. That’s another reason why we did not trend confidently Wednesday. It was more of a book-squaring session.”

As for the storage report for the week ended Oct. 7, Evans said he expects the Energy Information Administration’s (EIA) report Thursday morning to reveal a build between 40-50 Bcf.

Industry estimates of the week’s injections of natural gas to working gas inventories are below injections during the same week last year. Kyle Cooper of Citigroup estimates that for the week ending Oct. 7, supplies increased by 56 to 66 Bcf. He admitted that while his confidence in the estimate remains low, “This would still be a very bullish build on a temperature-adjusted basis as nationally the weather was very mild.”

The ICAP-Nymex storage options auction on Wednesday revealed a consensus forecast of a 55.1 Bcf injection. The number revealed Thursday morning will also be compared to last year’s 69 Bcf build and the five-year average injection of 64 Bcf.

First Enercast Financial (FEF) analyst Agbeli Ameko is predicting an injection of 48 Bcf for this week’s EIA release. “Mild weather conditions assisted in lowering total natural gas demand over this period, helping offset lost Gulf of Mexico shut-in production,” Ameko said. “We are still experiencing over 40 Bcf per week in lost production from both Katrina and Rita.”

The analyst noted that the remainder of October is projected to be warmer than average, which is seen as a bearish factor for natural gas as increased heating demand is delayed. “Despite lost Gulf production, this favorable weather should help push total stocks near the 3,100 Bcf level to start the withdrawal season,” he said.

However, the analyst noted there are still unknowns. “Models are updating now to account for Rita’s impact,” Ameko said. “Early output shows extremely tight supply by late March, putting the market below levels experienced in 2001. However, the full supply impact Rita caused is still getting assessed.”

Statistics from the National Weather Service (NWS) show increased cooling degree days (CDD) for the week ended Oct. 8. During the summer cooling season, higher CDD tallies would normally translate to higher consumption of natural gas for electrical generation. However analysts say that higher CDD in October indicate milder weather and less demand for natural gas. The NWS showed that the Mid-Atlantic states of New York, New Jersey, and Pennsylvania scored 13 CDD or 10 higher than normal. The industrialized states of Ohio, Indiana, Michigan, Illinois, and Wisconsin tallied 30 CDD or 26 more than normal.

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