The Energy Information Administration (EIA) reported Thursday morning that 75 Bcf was injected into underground storage for the week ended June 17, sending the market tumbling 20 cents in the first hour after the announcement. However, the futures market was resilient, and July natural gas rebounded higher in sympathy with a sizeable crude rally, settling at $7.473, up 3.1 cents on the day. August crude settled at $59.42/bbl, up $1.33.

While the storage injection number came within industry expectations, the EIA report also included a revision for a prior week from 112 Bcf to 105 Bcf, a decrease of 7 Bcf from what was originally reported.

“The reported revision caused the stocks for June 10, 2005 to change from 1,963 Bcf to 1,956 Bcf,” the EIA said. “The stock estimates for June 10, 2005 reflect a resubmission of data from one or more respondents.”

Immediately following the weekly report and the revision, July natural gas dropped from $7.64 to $7.475.

“I was looking to pick a fight Thursday morning in the pit,” said Sandy Trot, Nymex local trader and president of EnergyLinks Futures, LLC. “The area was $7.62 to $7.66. I was buying and wanted to see how strong people felt about that level.” After reaching $7.64, the July contract immediately fell lower.

Speaking at Natural Gas Intelligence’s two-day natural gas futures workshop held at the New York Mercantile Exchange, Trot said, “Whenever you hear noise, noise, noise, and then it gets quiet in the pit, you want to fade the trend,” Trot said. “All of the sudden this morning, there was quiet. Everyone was short. You don’t want to bid it up, but crude oil rallied 75 cents at that point.

“As of right now, the bulls and bears are split almost right down the middle. Right now it is a tug of war. So there is choppy back and forth trading. I don’t think we are ready for a big move up yet. I think it will wait until we get either extreme heat or the hurricane season starts up for real.

“I’m personally short July against the winter months for bidweek next week.” Trot noted he is usually bearish from June 1 to July 20, which has historically been a period of lower prices. However, the local trader noted that from July 20 through Labor Day he is normally bullish.

“Right now, the thing you have to be leery of is the fact that the funds were big time short, but now [they] are basically neutral,” Trot said. “If they go long 40,000 to 55,000, that could take the prompt month up $1.00 in a heartbeat.”

Talking about futures in general, Trot said the key spread is the one that bridges the winter strip to the summer strip. “March/April is the best spread out there,” said Trot, who recommends buying the spread when it narrows and selling it when it widens. Buying the spread, Trot explained, entails the simultaneous purchase of March and the sale of April.

Commenting on the storage confusion, Commercial Brokerage Corp.’s Tom Saal said, “I think this week’s number was relatively bearish because it was higher than the ICAP auction was looking for. On the other hand, you have this downward revision, which could be seen as bullish. The market likes to react to fresh information rather than revised older information.”

The industry consensus for the week had been for a 75 Bcf injection. Coming in well below all other estimates, the ICAP-Nymex storage options auction on Wednesday revealed a consensus forecast of a 67.1 Bcf build.

The 75 Bcf injection was well below last year’s 86 Bcf build and a five-year average injection of 92 Bcf.

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