With a little help from triggering technical support on the charts, May natural gas futures values shot higher in Thursday morning trade following news from the Energy Information Administration (EIA) that only 12 Bcf was injected into underground storage for the week ending March 26.

In pre-report trading the prompt-month contract wound down to a low of $3.810, but in the minutes immediately following the fresh data at 10:30 a.m. EDT it shot to $4.114. The May contract went on to record a high of $4.157 before closing out the day’s regular session at $4.086, up 21.7 cents from Wednesday’s close and 15.6 cents higher than the previous week’s finish.

“I think we saw some stars align for the bulls Thursday morning,” a New York-based broker told NGI. “Not only was the storage report somewhat bullish compared to expectations, but we also got an assist from touching technical support at $3.820 just prior to the release.”

The $3.820 price level is seen as important because it represents a 61.8% retracement of the September-to-January move higher from $2.409 to $6.108. Some traders believe a meaningful breach of the price level could open the door to last year’s $2.409 low.

Hencorp Futures broker Tom Saal said it was pretty simple to see why prices swung higher Thursday. “The EIA announced an injection of 12 Bcf, smaller than expected,” he said. “Then the buyers showed up…probably professional speculators.”

Citi Futures Perspective analyst Tim Evans said the storage report had something for both the bulls and the bears. “The 12 Bcf build in storage was slightly supportive compared with the consensus expectation, but bearish relative to the five-year average net withdrawal of 28 Bcf,” he said. “This still would seem to reinforce the dominant bearish sentiment, especially given the likelihood of further bearish reports off the mild temperatures in northern heating markets we’re seeing. In that sense, the data doesn’t really change the trading dynamic here.”

Going into the report, Bentek Energy was projecting an injection of 26 Bcf and the Reuters survey was looking for a 15 Bcf build. The actual 12 Bcf injection was also bearish when compared to last year’s “no change” for the week.

According to the EIA, working gas in storage stood at 1,638 Bcf as of March 26. Stocks are still 16 Bcf less than last year at this time, but 160 Bcf above the five-year average of 1,478 Bcf. For the week the East Region withdrew 7 Bcf while the Producing and West regions injected 15 Bcf and 4 Bcf, respectively.

Prior to the report Brian LaRose, an analyst with United-ICAP, said the market was entering a pivotal period. If the bullish case can prevail, “all we would expect is congestion near the lows,” LaRose said Thursday morning. The bears, however, can look forward to a series of lower price supports. “For a period of consolidation to be possible $3.820 must provide support. Take out this level and we see two potential targets: $3.755 and $3.600. Fail to find support from either of this levels and natgas would have room down to $3.304-3.200 minimum.”

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