Coming right inline with industry expectations, the Energy Information Administration (EIA) reported Thursday morning that 67 Bcf was injected into underground natural gas storage caverns for the week ending Sept. 18. In response, front-month natural gas futures — which had been heading lower in pre-report trading — took a few minutes to get its bearings before reversing higher.

Just before 1:30 p.m. EDT, October natural gas futures recorded a high of $3.999 before closing Thursday’s regular session at $3.955, up 9.5 cents from Wednesday’s close.

Just prior to the 10:30 a.m. EDT storage report, October futures were trading at $3.790, but in the minutes that immediately followed the contract put in a low of $3.732 before heading toward established resistance at $3.900, which was promptly taken out in afternoon trading.

“The tides have turned in this market,” said Julio Sera, a broker with Hencorp Becstone Futures LC in Miami. “The injection was right there with expectations — maybe one or two billion cubic feet less than some expected. It was more of the same that we’ve seen for weeks on weeks; however, the market looks a little different now. We’re nearing the end of the injection period and lots of the forecasts are calling for a colder-than-normal winter in some areas, so I think that is sparking some short-covering…just in case.”

With the change of market direction, Sera said buyers will likely be targeting the dips going forward. “The October-November spread is still more or less at 95 cents, so we’ll see how it looks at expiration. There might be some selling into the October contract as the expiration nears, but I see any pullback is going to be a buying opportunity. The further out we go we are going to see some drops in production and this market is also going to start seeing the effects of winter.”

Not everyone was convinced of the price direction change. Traders who use quantitative pattern matching to make their buy-sell decisions confess that a strict interpretation of their models shows that the recent advances in natural gas futures are only corrective of the major downtrend in place since last summer.

“I say a corrective move up with hesitancy because the market has moved a lot higher than I would have thought,” said a Texas fund trader. “A correction implies that there are lower lows, but at this point I find it hard to believe that we are going to get to lower lows from here; $4.200 to $4.400 would make me believe that the earlier correction had now changed to a trend higher.”

Most expectations ahead of the report were for an injection of 67 Bcf to 70 Bcf, but Citi Futures Perspective analyst Tim Evans had been looking for a 78 Bcf build. That said, Evans called the actual 67 Bcf addition “slightly supportive.”

“The 67 Bcf in net injections was slightly below expectations and slightly under the 69 Bcf five-year average, a supportive number,” Evans said. “That doesn’t necessarily mean prices rally, however, as the advance in prices over the past few weeks already did anticipate some degree of market tightening.”

Bentek Energy, which predicted the injection correctly, noted that the current supply of working gas in storage of 3,525 is only 20 Bcf shy of the all-time record level of 3,545 Bcf, which was set during the week ending Nov. 2, 2007. Last year’s peak of 3,488 Bcf was reached during the week ending Nov. 14, 2008. The interesting part is that the 2009 injection season still has more than a month left to run.

“If regional injection rates follow the five-year average for the remainder of the injection season, stocks in the East Region will be 51 Bcf below the EIA estimated max capacity of 2,178 Bcf,” Bentek said in its weekly storage note. “Stocks in the Producing region will climb to 43 Bcf above EIA estimated max capacity of 1,202 Bcf, and stocks in the West region will be 19 Bcf above EIA max capacity of 509 Bcf.”

At 3,525 Bcf, current stocks are 509 Bcf higher than last year at this time and 485 Bcf above the five-year average of 3,040 Bcf. The East Region deposited 41 Bcf for the week while the Producing Region and West Region added 16 Bcf and 10 Bcf, respectively.

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