After stair-stepping higher Thursday morning, the natural gas futures market shuffled back to unchanged for the session as traders were forced to choke down yet another bearish storage report (84 Bcf injection). Although it succeeded in notching a higher high and a higher low for the third straight session, the November contract failed to post a gain for the day. It finished at $4.913, down 1.1 cents.

According to the Energy Information Administration, 84 Bcf was added to underground storage facilities last week, lifting stocks to 3,028 Bcf as of Oct. 17. The inventory build was seen as a negative factor for gas prices from virtually all vantage points. Not only did the refill easily surpass the year-ago and the five-year average injections of 33 and 51 Bcf, respectively, it also surpassed the range of market expectations centered on a 75-80 Bcf addition.

The market also killed two birds with one stone last week. In addition to pushing stocks above the psychologically important 3,000 Bcf “full” storage level, the market also erased the last of its storage deficit to the five-year average. Storage is now 25 Bcf more than five-year average — a remarkable feat considering the deficit loomed as large as 600 Bcf this spring. Looking ahead, bears now set their sights on eliminating the deficit to last year, which currently stands at 133 Bcf.

“With cool Northeast/Midwest temperatures encouraging late-week heat loads, we expect a lower injection figure in the next storage report,” admitted Ronald Barone of UBS. “However — when combined with the pending 11 Bcf year-ago injection comparison — we would expect another moderate deficit decline upon the release of the next EIA report,” he wrote in a note to customers Thursday.

That report will not come without its fair share of confusion, however. In an unprecedented move Thursday, the Energy Information Administration announced that there will be a storage revision as part of the next scheduled report. Specifically, the group said it would revise data from July 4 though the present, based on a new survey methodology that would increase the number of companies surveyed from 44 to 55. Because it is thought that this will bring the weekly data closer to the monthly data, market-watchers are bracing for an upward revision in the amount of gas estimated in the ground (see related story).

George Leide of New York-based Rafferty Technical Research was a bit surprised that the market did not fall further as a result of the bearish one-two storage combination Thursday. He also does not rule out the possibility of technical selling at these levels. “This market is definitely on the defensive. The rallies this morning were no different than the rallies from earlier in the week — they all failed to fill in the chart gap up to $5.025. Locals did their best this morning, but it was not enough, and prices have come off.”

That being said, Leide would suggest being cautiously short from current levels in the hopes the market will continue lower and fill in the rollover gap down to $4.52, which was reached late last month by the expiring October contract. Should the market prove him wrong, he would reverse to a long position with a buy stop placed at $5.03. “In that case, we could see $5.27-34 in a hurry,” Leide said.

Tim Evans of IFR Pegasus in New York also is short (November from $5.33) and keys off $5.04 as a prudent level at which to take profits.

However, not everyone sees lower prices. For Jay Levine of New Hampshire-based Advest Inc. the greater risk exists to the upside. “Charts are slowly correcting an oversold condition and a turn might come at any minute,” he said. While admitting that prices are at historically very rich levels, Levine pointed to the market’s inability to trend lower following the undeniably bearish storage news Thursday. Three Tcf is no longer a possibility, but a reality. The only problem is that the market is more concerned over the possibility of cold weather this winter, he said.

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