In a preemptive move ahead of what could be another bearish storage release today, natural gas futures slipped lower yesterday as profit-takers rescinded advances achieved in Monday’s expiration session. The December contract began its tenure as prompt month in dramatic fashion, gapping lower at the open en route to a 15.6-cent decline and $3.183 close.

Market watchers polled by NGI Tuesday agreed the sell-off was a precaution taken by new longs to guard against the potential for an adverse price move when the American Gas Association releases fresh data this afternoon. Even though last Wednesday’s report spawned a wave of buying that would put a smile on anyone’s face with a long position, traders yesterday were taking no chances. One possible explanation for this is that the dollar-plus price increase over the past month has been a function of a combination of fund, commercial and local buying. And while fund and commercial traders are typically unlikely to reverse their positions without good reason, it is safe to assume that after enjoying nice gains lately, local traders wanted to cash in their chips, sources told NGI.

Thomas Driscoll of Lehman Brothers in New York estimates storage grew by 40 Bcf last week, 15 Bcf more than the week prior, but still well below last year’s comparable 70 Bcf refill. His calculation is based on heating degree days released by the National Weather Service, indicating that it was cooler last week than last year at the same time, but still warmer than the norm.

Looking ahead, Driscoll uses heating degree day forecast data to come up with his estimate that 30 Bcf is being injected into underground storage facilities this week. That figure falls in line with last year’s 36 Bcf refill.

Meanwhile, storage junkies will continue to get their weekly fix after AGA ceases its surveys Jan. 2. The Energy Department’s Energy Information Administration (EIA) announced Tuesday it will pick up where the AGA leaves off, conducting its own weekly surveys (see related story).

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