In what might be its most bullish four-cent decline in recent memory, natural gas futures rebounded late in the session Wednesday as traders were able to look past a double helping of bearish storage news to bid up prices in the closing 20 minutes of trading. With its $2.813 closing price, the December contract was 3.9 cents lower for the session, but an impressive 7 cents above its low for the session.

The American Gas Association announced a 10 Bcf upward revision to the storage data for the week ending Nov. 9, which when summed with the actual 7 Bcf refill from that report and last week’s 15 Bcf injection, added up to a net 32 Bcf increase in the amount of gas in underground storage facilities over the two week period ending Nov. 16. Total gas in storage gas is now a record 95% full at 3,132 Bcf, which narrowly surpasses the previous peak from 1998 of 3,127 Bcf.

The revision to the previous report took place entirely in the Consuming Region, East, reversing a 3 Bcf withdrawal in favor of a 7 Bcf injection. In last week’s data the AGA reported no change to the 1,793 Bcf in the East Consuming Region. Instead the injection was split between the Producing Region and the Consuming Region West, which added 13 and 2 Bcf respectively.

The AGA has come under fire for waiting until the next report to offer a revision, even though it may have known about the error days earlier. Market participants feel that this is a case of asymmetrical information whereby the company that has revised its numbers is aware of the change well before the rest of the market. Traders believe that this knowledge could provide the company with an unfair advantage in futures or derivative market trading activities. AGA maintains the announcement should be made when everyone is aware and awaiting storage numbers, rather than at some other time in the week, when some market participants might be caught off-guard. The Commodity Futures Trading Commission investigated the AGA’s policies and procedures following a 47 Bcf upward revision in August. No findings were released and no action was taken by the CFTC.

Looking ahead, the market is on tenuous ground. While the market’s ability to hold support at $2.50 and post a 17.6-cent gain for the week is encouraging, many traders feel those advances could be rescinded by one wave of selling pressure. Accordingly, traders will be especially attentive to forecasts released this morning to see if they validate or downgrade forecasts last week calling for below normal temperatures.

According to the latest six- to 10-day forecast released Wednesday by the National Weather Service, below normal temperatures are expected across much of the western U.S. through Dec. 1. Although attempting to predict weather further than 10 days out is problematic at best, both private and governmental forecasting agencies expect that cool weather to migrate to the Plains, Midwest and eventually to the eastern U.S. by next week. If they are right and these expectations come to fruition, it would validate longer-lead weather outlooks that have called for a mild start to the winter season followed by colder than normal mercury readings.

However, if the forecasts do not reconfirm the fronts that are expected to move in this week, this market is going to get hurt, a veteran trader assessed. “It becomes more of a fundamental, physical reactionary play than anything. A gap lower opening would not be out of the question.”

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