Natural gas futures plunged then rallied following the release of government storage figures showing an increase in inventories that was greater than what traders had been expecting.

The injection of 105 Bcf was higher than market surveys and above independent analyst projections; however, 8 Bcf represented a reclassification of base gas to working gas in the East Region for the week ending May 9.

Once traders had digested the adjusted figure, prices rallied to the highs of the day. Immediately following the Energy Information Administration’s (EIA) 10:30 a.m. EDT release, June futures fell to a low of $4.289, but by 10:45 a.m. June was at $4.484, up 11.7 cents from Wednesday’s settlement.

Prior to the release of the data, analysts were looking for a build of about 100 Bcf. A Reuters survey of 24 traders and analysts revealed an increase of 99 Bcf with a range of 91 Bcf to 108 Bcf. IAF Advisors of Houston forecast a build of 99 Bcf, and Bentek Energy’s flow model anticipated an injection of 108 Bcf.

“There was a reclassification to 105 Bcf, so initially off the bigger number, we made new lows, but once traders figured that the reclassification put the original number at 97 Bcf, we rallied and made new highs. We almost saw support and resistance at the same time, $4.25 on the downside and $4.50 on the upside,” said a New York floor trader.

Other analysts elected to focus on the 105 Bcf figure. “The market may be staging an upward technical correction after having fallen hard over the past week, but the weekly storage data was bearish, not bullish, a larger-than-expected 105 Bcf build that was well above the 83 Bcf five-year average for the period. The build also implies a further weakening of the background supply-demand balance, which will give the market a better chance of reaching an adequate storage level ahead of next winter,” said Tim Evans of Citi Futures Perspective.

Inventories now stand at 1,160 Bcf and are 790 Bcf less than last year and 959 Bcf below the five-year average. In the East Region 60 Bcf was injected, and the West Region saw inventories up by 16 Bcf. Inventories in the Producing Region rose by 29 Bcf.

The Producing region salt cavern storage figure increase by 13 Bcf from the previous week to 126 Bcf, while the non-salt cavern figure rose by 16 Bcf to 358 Bcf.