December natural gas futures’ first test as the front-month contract arrived Thursday morning as the Energy Information Administration (EIA) reported that 25 Bcf was injected into underground storage for the week ending Oct. 23, an addition that was below most industry expectations.

Ahead of the 10:30 a.m. EDT report, December natural gas was trading at $5.054. In the minutes that immediately followed, the contract touched $4.975 before rebounding to $5.129. In its first regular session action, December natural gas traded a 15.4-cent range before closing at $5.062, down four-tenths of a penny.

“With November off the board, I got the feeling traders were just getting their bearings with the December contract on Thursday,” said a New York trader. “I think that is likely why we saw a little bit of up and down before a return to basically Wednesday’s close. A lot of things in this market are going to be decided by how the weather picture unfolds in the weeks ahead. Some significant cold would start to cut into the storage glut and would likely light a fire under prices. However, if this warm October translates into a warm November, I think we’ve likely got some room to fall.”

Citi Futures Perspectives analyst Tim Evans — who was on the record for a 45 Bcf injection — called the report “nominally bearish” but noted that near-capacity levels of gas make the storage number’s impact hard to decipher.

“The 25 Bcf net injection for last week was below the consensus expectation and well-below the 45 Bcf build we thought possible given the temperatures for last week,” said Evans. “However, to the extent that this represents a lack of available storage capacity to receive more gas, this could still be seen as a bearish report. Gas at 3,759 Bcf is certainly at a new all-time high and a surplus level. So the context here, with warmer-than-normal temperatures ahead, might still be seen as bearish. There may also be a sentiment issue here as the failure of the market to rally off what was a lower than expected build would make the market look heavy.”

Tradition Energy broker Gene McGillian’s injection estimate was right on the money, although he allowed that late-season estimates are hard to nail down, especially during an injection season where storage levels are so near capacity. He added that some gas that was earmarked for storage during the week can end up being pushed onto the spot market due to space constraints underground.

Bentek Energy was calling for a 27 Bcf build for the week, while surveys from Reuters and Bloomberg had been looking for a 31 Bcf addition. The actual 25 Bcf injection was much smaller than last year’s 49 Bcf build for the week and the five-year average addition of 43 Bcf.

As of Oct. 23 working gas in storage stood at 3,759 Bcf, according to EIA estimates. Stocks are 373 Bcf higher than last year at this time and 414 Bcf above the five-year average of 3,345 Bcf. The East Region injected 17 Bcf while the West and Producing regions chipped in 7 Bcf and 1 Bcf, respectively.

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