If you are a futures bear, it goes without saying that you have had quite a run over the past eight months. After all, the market has repeatedly given you price-negative technical and fundamental news on which to trade. And even when the market was hit with a bullish influence such as a tropical storm or a round of short-covering, the rally has been short-lived. In possibly the crowning example of this bearishness, the American Gas Association announced yesterday not only that a whopping 86 Bcf had been injected into storage last week, but also that they were forced to revise — as many market participants had expected — the refill from the week prior from 3 Bcf to 50 Bcf.

The market reacted accordingly, dropping a cool 10% of its value to etch a new 16-month low at $2.848.

The revision took place entirely in the Consuming Region East, where a net withdrawal of 12 Bcf was supplanted with a net injection of 35 Bcf. Taking into account that cumulative net 136 Bcf injection for the two weeks ending Aug. 17, storage stands 73.4% full at 2,419 Bcf, 327 Bcf more than last year and 198 Bcf more than the five-year average.

Last Wednesday the market shot 37.4 cents higher to close at $3.468 after the release of what is now known to be erroneous information.

However, for one veteran trader the evidence of this market’s weakness lies not in this week’s hefty injection figure nor in the revised injection from a week ago, but rather in the cumulative total level of working gas in storage, which has risen precipitously since the refill season began April 1.

“We are going to end up with more gas — on Oct. 31 — than we have ever had in the history of the United States. So if you don’t have winter weather in the first 12 days of November, you can stick a fork in this market (because it’s done).” And while he believes the market may have found a long term balancing point around the $3.00 level, he does not rule out the market breaking down to the $2.40-50 level in the next 20 trading days.

Using guidance from forecasted cooling and heating degree days available from the National Oceanic and Atmospheric Administration, Thomas Dricoll of New York-based Lehman Brothers looks for an 80 Bcf storage injection for the week ending Aug. 24.

He goes on to say that the weather for the season to date has been 5.5% warmer than last year and 10.2% warmer than normal and this has equated to an estimated increase in cooling demand by 75 Bcf versus normal. Meanwhile, net injections for that period have outstripped the five-year average by 536 Bcf inferring that supply has increased by a greater degree than demand over that period.

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