While last week’s bearish storage report caught traders off guard, this week’s report of a 42 Bcf injection for the week ended July 22 was a little more in sync with expectations, especially considering last week’s oppressive heat and minor Gulf production shut-ins due to Hurricane Emily.

Despite the bullish report, considering past injections for the period, September natural gas futures barely blinked. In fact, it appeared as if an even smaller number had been factored into prices already as the prompt month started to descend following the storage report.

September natural gas futures reached a $7.50 low in morning trade. However, the fun and games weren’t done, as the prompt month rebounded to settle at $7.694, up 10.2 cents from Wednesday’s close.

Advest Inc.’s Jay Levine said the report was “on the lower-side of expectations, but, like [Wednesday’s] API/DOE stats, a tad bearish fundamentally-speaking if you ask me. Which, as we all know, doesn’t necessarily mean prices will decline as other factors are also at work.”

While coming in well below historical comparisons, the injection was only slightly below most of the industry’s expectations. During the same week last year a 70 Bcf injection was reported, and the five-year average build for the week was 66 Bcf. A Reuters survey of 21 industry players called for an injection of 50 Bcf. The ICAP-Nymex storage options auction on Wednesday revealed a consensus forecast of a 44.5 Bcf injection.

Working gas in storage now stands at 2,381 Bcf, according to EIA estimates. Stocks are now 94 Bcf higher than last year at this time and 197 Bcf above the five-year average of 2,184 Bcf.

Thursday’s regional storage contribution breakdown was a little different than most reports this time of year. The Producing region actually recorded a 1 Bcf withdrawal, while the East and West regions injected 41 Bcf and 2 Bcf, respectively.

“The report is as close to meaningless as it could get,” according to Ed Kennedy of Commercial Brokerage Corp. in Miami, who said that the biggest thing for the natural gas futures market at this time of year is weather.

Despite the cool off on Thursday, Kennedy warned that starting on Monday or Tuesday “we are going right back into the oven. The storage operators have a number that they are going to get into the ground. They get it in the ground every year without fail, so that is meaningless. The big demand this time of year is the air conditioning load.”

In addition, Kennedy noted that there is a tropical wave about 425 east of the Northern Leeward Islands that “is expected to strengthen and get into the Gulf of Mexico according to some independent forecasters.”

As for the wacky trading day, Kennedy said there really was something for everybody on Thursday. “When the report came out and we ran up to $7.69, we had trade selling and fund selling coming in,” he said. “Once we started getting back through $7.64 and $7.65, day-trading funds ran right back in and covered. Those are day-trading funds, not the big trend following funds that we should be worried about.

“[Producers and marketers] were buyers earlier in the day — probably off of the weather forecast, but [they] were also sellers on the second rally making new highs. The local traders and day-traders both got creamed Thursday,” said Kennedy. “It really was a confusing day. If you want to explain the erratic action, look no further than weather.”

As for the market’s next move, he said at this point he is not quite sure. “The type of action we had Thursday would normally be a selling opportunity on the opening on Friday,” he said. “However, I am going to wait and see what happens Friday before I do anything.”

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