Traders were apparently expecting a larger natural gas storage build last week than the 21 Bcf addition reported Thursday morning by the Energy Information Administration (EIA) because May natural gas futures knee-jerked higher following the 10:30 a.m. EDT report. However, the contract ended the day on a lower note, closing out the regular session at $3.599, down 9.4 cents from Wednesday’s close.

After trading at $3.598 just prior to the report, the prompt-month contract shot to the day’s high of $3.672 in the minutes that immediately followed. However, futures trailed lower from there to record the day’s low of $3.534 just after 11:45 a.m. EDT before inching higher to close.

“The storage number was in line with expectations, so I was kind of surprised that we rallied off of it,” said Steve Blair, a broker with Rafferty Technical Research in New York. “In the end it looks like the market got it right, because at the end of the day we have a lot of gas. Being the shoulder month, there is not a lot of impetus to head in either direction. There is not a lot going on and futures appear to be rangebound.”

Blair noted that each time prices get close to a down sloping major support trend line, it rallies, which he believes is what happened Thursday. “Every time we get down within a few cents of that moving line, we bounce…and I think we will continue to do that,” he said. “Right now that line is down around $3.460, so Thursday’s $3.534 likely was close enough to trigger the rally.”

Citi Futures Perspective analyst Tim Evans called the report “neutral,” but he noted that the healthy injection basically confirmed that the bears are still in control.

“The 21 Bcf net injection to U.S. natural gas storage for last week was just above center in the range of expectations and dead even with the five-year average, a neutral number,” Evans noted. “That said, knowing the number does remove an element of risk from the market, which could spark trade. We’d say that it also confirms that the overall supply-demand balance remains bearish, once we adjust for weather.”

Leading up to the storage report for the week ended April 10, industry injection estimates were ranging fairly widely between 15 Bcf and 30 Bcf. Evans had been looking for a 16 Bcf build, but Bentek Energy said its flow model indicated an injection of 29 Bcf. The actual injection was spot on with last year’s 21 Bcf build and was just above the five-year average injection of 20 Bcf.

Part of the explanation for some of the seemingly low injection predictions could be last week’s heating requirements. For the week ended April 11, New England plus New York, New Jersey and Pennsylvania experienced all of 10 heating degree days (HDD) more than normal, according to the National Weather Service. The Midwest from Ohio to Wisconsin was a little chillier, tallying 171 HDD, or 33 more than normal, and other portions of the country, the Southeast and Plains also experienced higher than normal HDD readings.

According to the EIA, working gas in storage stood at 1,695 Bcf as of April 10. Stocks are now 438 Bcf higher than last year at this time and 311 Bcf above the five-year average of 1,384 Bcf. The Producing region led injections with a 12 Bcf contribution while the West and East regions chipped in 5 Bcf and 4 Bcf, respectively.

Blair said storage levels remain rather impressive. “While we did not grow the year-on-year and year-on-five-year average overhangs, no matter how you look at the storage situation, we have an awful lot of gas,” he said.

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