Natural gas futures finished the week on a strong note Friday astraders reacted to an unconfirmed (and later retracted) news reportthat the American Gas Association (AGA) had overestimated theamount of working gas in underground storage facilities. Aftergapping higher on the open, the December contract shuffled higherthroughout much of the session, closing 17.1 cents higher at$4.931.

Sources were quick to point to a story off an energy news wireservice Thursday afternoon stating that the Energy InformationAdministration (EIA), had accused the AGA of overstating storagelevels.

However, EIA storage expert Jim Todaro said he was not aware ofanyone at his agency making any comments of that nature, nor wasthere any foundation for them. Todaro told Daily GPI “there hasbeen a difference for years in our numbers compared to AGA. This isnothing new.” They are different kinds of surveys. Todaro notedthat EIA’s numbers, which are collected monthly, and AGA’s, whichare collected weekly, diverge and converge, following a pattern.”Usually they converge in October, which they are doing now, thenseparate during the winter and converge again in March. Right nowthere is only about a 12 Bcf difference,” Todaro said.

He noted the one difference this year is that while nationwidetotals are close, the data they report for the West, includingCalifornia, Montana, Wyoming and Colorado, have spread fairly farapart. “We have about 315 Bcf for the West, while AGA has 385 Bcf.”But overall, Todaro said “the storage situation is looking betterand better. It’s been adding about 10 Bcf/day, and now is within 3%of the five-year average.”

Todaro explained that because of the lag time built into EIA’s”real” survey, the agency takes its latest monthly figures and addson AGA’s weekly numbers for the current weeks, replacing them whenEIA’s next monthly survey is complete. EIA’s latest report isposted here.

Despite the unfounded nature of the report, it received a lot ofattention on the Nymex floor, said Ira Hochman, a consultant toseveral high profile local traders. “One trader I spoke to went asfar as to say that the AGA was going to issue a correction…Everyone wanted to be a buyer today [Friday]. And the gap higheropen did little to dissuade them.”

A Houston-based risk manager admitted seeing the report, butdismissed it as bogus from the start.

Looking ahead, Hochman is transfixed on the $4.85 level, whichis an important momentum number that he feels the market mustdevelop above in order for it to tag on additional gains this week.”The most bullish scenario would be if the market is able to rallyand then come back down and hold above $4.85. If we hold $4.85,things could really take off.”

Alternatively, he does not rule out a gap lower open thismorning to set up an island top on the daily chart.

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