Proving that skepticism over last week’s natural gas storage report was warranted, the Energy Information Administration (EIA) said Thursday morning that it significantly revised its report for the week ended Nov. 19 due to “a resubmission of data from one or more respondents.” The announcement immediately pulled the rug out from under the January futures contract, which ended up settling down 60.2 cents at $6.811.

The government agency revised the 49 Bcf withdrawal reported last week to a 17 Bcf withdrawal. While the report was simply corrected, last Wednesday’s wild futures trading day will be on the books forever. Based on what appeared to be a very bullish storage report at the time, the December contract expired last Wednesday at $7.976, up $1.183, while January futures climbed $1.018 to settle at $8.639 (see Daily GPI, Nov. 29). Industrial customers particularly felt the pain of the price run-up and immediately called for a change from weekly to daily storage reports.

The 32 Bcf revision was confined to data for the East region, where one or more storage operators apparently submitted incorrect data. The reported revision caused the stocks for Nov. 19 to change from 3,272 Bcf to 3,304 Bcf. EIA defended its process, saying it does edit checks and “we are constantly emphasizing the importance of accurate data submissions to the respondents” (see related story).

In addition to the revision, the EIA reported that 5 Bcf was withdrawn from storage for the week ended Nov. 26. The pull came in on the low side of industry projections and historical data, which added to the morning’s overwhelmingly bearish news. The 5 Bcf draw came nowhere near last year’s 59 Bcf draw nor the five-year average pull of 41 Bcf.

As a result of the small net withdrawal for last week and the revision to the previous week’s data, January natural gas futures dropped rapidly Thursday morning. After hitting a $6.69 low during the session, the prompt month settled at $6.811.

Prior to last week’s erroneous report, the prompt month last Wednesday — which was the December contract at the time — reached a low of $6.66.

“We are kind of back to where we were last Wednesday before that [erroneous] number came out,” said Commercial Brokerage Corp.’s Tom Saal. “We are definitely back into the same pricing area. I think we have found a pricing area with some support here, kind of like we did last week. We worked back to the future.”

Saal also pointed out that the most recent move also brought futures closer inline with the cash market, noting that NGI’s Henry Hub averaged $6.77 on Wednesday.

In addition to the storage correction, natural gas was also helped lower Thursday by the continued fall in petroleum futures. January crude and January heating oil fell by $2.24 and 7.21 cents, respectively. Crude settled at $43.25/bbl, a drop of $6.51 over the past three days. Heating oil on Thursday settled at $1.2572/gallon, a 20.12-cent decrease over the similar period.

Working gas in storage now stands at 3,299 Bcf, according to EIA estimates. Stocks are 204 Bcf higher than the same time last year and 331 Bcf above the five-year average of 2,968 Bcf. For the week ended Nov. 26, the East and West regions reported net withdrawals of 5 Bcf and 2 Bcf, respectively, while the Producing region posted a net injection of 2 Bcf.

Lehman Brothers analyst Thomas Driscoll said he’s not sure natural gas is done heading lower yet. “Demand needs to rise to allow storage to fall toward normal seasonal levels as winter progresses,” he said. “Either colder than normal winter weather or a positive (perhaps price induced) demand response will be needed. We believe the risks to gas prices remain to the downside.”

Commercial Brokerage Corp.’s Ed Kennedy said he wasn’t ready to call $6.69 a bottom any time soon either, noting that the path of natural gas futures is still plotted by weather right now. “While the National Weather Service is calling for above normal temperatures for next week, the independent forecasters are saying that Arctic air is moving into the Midcontinent Wednesday and then moving east into the weekend, with a chance of a major snowstorm up the East Coast next Friday and Saturday.”

Kennedy said the question becomes, “who’s right?”

He added that the market still appears to be overlooking just how full storage is. “With the amount of gas we have in storage and the fact that there are no real supply problems, we have plenty of gas to handle a normal temperature winter, let alone an above normal temperature winter.”

He warned to watch out for a short-covering rally on Friday ahead of the weekend.

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