By coming in larger than most estimates and shattering the five-year average build, the Energy Information Administration’s (EIA) estimated natural gas storage injection for the week ended Oct. 1 was an undeniably bearish 81 Bcf. But natural gas futures treated the report as a mere hiccup in Thursday morning trade.

Immediately following the 10:30 a.m. EDT report, November futures dropped 14 cents. However, the prompt month found consistent support at the $6.95 level and rebounded a half-hour later to trade at $7.14, up 9.5 cents on the day. After hitting a high of $7.44 in afternoon trading, the contract settled the day at $7.255, up 21 cents.

Due to continued shut ins in the Gulf of Mexico, much of the industry was expecting a natural gas storage build within the 60-79 Bcf range The 81 Bcf injection came close to matching last year’s 84 Bcf injection, but was significantly larger than the five-year average build for the week of 64 Bcf.

Working gas in storage now stands at 3,092 Bcf, according to EIA estimates. Stocks are now 188 Bcf higher than last year at this time and 200 Bcf above the five-year average of 2,892 Bcf. The East region put 55 Bcf into underground storage, while the Producing and West regions chipped in 15 Bcf and 11 Bcf, respectively.

CreditSights analyst Brian M. Gibbons, Jr. said storage is now 6.5% higher than a year ago and 6.9% higher than the five-year seasonal average. “As the GOM [Gulf of Mexico] continues to regain its production footing and the outlook for more storms dissipates, inventory should only continue to climb above full storage,” he said. “Gas can only ride oil’s coattails so far, before the market comes to the conclusion that there is plenty of gas to go around for winter. We expect prices to come off considerably, back to the $5-6/Mcf range in the near-term.”

In spite of the storage report, “it was just a purely bullish day,” a Washington, DC-based broker said. “If this comes out as the fifth wave of an Elliot Five-Wave pattern, we could see this thing going to $7.68 on the upside. On the opposite side, the correction action could bring us back to $6.41-6.42, but that may be a long way down the road.” The $6.41 level reached on Sept. 22 was the top of the first wave in the pattern.

The broker added that the market on Thursday was also feeling a psychological blow from the Minerals Management Service shut-in report Wednesday. The fact that a 23rd company was added to the report Wednesday, which upped the shut in amount slightly, “was not the news the market needed,” he said. “If we want to give prices a reason to come off, we need to see some improvement in Gulf operations, not, ‘oh my gosh, here is another 2% we forgot to add to shut-ins because we weren’t counting Company X.'”

On Thursday, the MMS’s survey went down to 19 companies. As of the latest report, 1.78/d Bcf was still offline.

The broker noted that standard bad event protocol wasn’t adhered to in the case of shut ins in the Gulf. “Get all of the information out completely as soon as possible, so you can’t have anymore bad headlines, only improvements,” he said. “Not to imply that there was any scandal involved here, but it just doesn’t help market psychology to have the shut-in number go back up instead of down.”

On top of the extended shut-ins, the broker said recent reports that winter cold is coming soon might have had some follow-through Thursday.

Some market watchers pointed to crude as another contributing factor to the continued strength in natural gas. The November crude futures contract hit a high of $53/bbl in Thursday morning trade, before settling up 65 cents on the day at $52.67. In addition, heating oil also hit an all-time new high of $1.4370 on Thursday before settling at $1.4309, up a penny on the day.

“With the Btu differential between heating oil and natural gas, you still have the incentive to switch to gas with these prices,” the broker said. “That is something that is clearly going to be supportive of gas, but I don’t know whether it is ‘the’ reason for the strength of gas. I just know it didn’t hurt.”

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