Buoyed by the release of a second-straight smaller-than-expected storage injection figure, natural gas futures climbed back from negative territory yesterday afternoon to notch a new three-week high, as weak shorts scrambled to cover their positions. The November contract finished at $2.48, up 9.2 cents for the session, but off slightly from the $2.54 high notched about 10 minutes earlier.

According to the American Gas Association, 65 Bcf was added to underground storage facilities for the week ending Oct. 5, bringing storage levels to 90% full at 2,979 Bcf. The refill was deemed bullish because it fell short of the five-year average injection of 66 Bcf, as well as market expectations centered in the 66-80 Bcf range. However, today’s injection edged out last year’s 62 Bcf refill, thereby adding to the oft-quoted year-on-year surplus currently at 437 Bcf.

The Eastern Consuming Region added 46 Bcf last week, bringing its total to 93% full. The Producing Region boosted its stores by 19 Bcf to notch an 86% full level. The Western Consuming Region, meanwhile, stayed pat at 89% with no net change in storage levels from last week.

Some market watchers view the market in a make-or-break situation right now. While further buying could pave the way for the market to fill in the $2.53-595 gap left on the November daily chart, some traders believe the market has at least one more push to the downside.

Jay Levine of Advest Futures remains firmly entrenched in the bear camp and will likely remain there until the overall U.S. economy stages a turn-around. Until that time, he looks to take advantage of rallies such as this one as a selling opportunity. “This is one of those exaggerations that I love. I have said all along that I would look to sell into any move higher, and this is a perfect example. The economy continues to hang like a dark cloud over the energy market and I don’t see that changing anytime soon.”

However, Levine is not bearish for fundamental reasons alone. Also pointing lower is the technical outlook, he reasons. “There needs to be more work done at the lower levels to convince me the bottom is in place.”

In daily technicals, November has support at the confluence of last Friday’s and Monday’s lows at $2.220-225. A break of that layer of support would, in all likelihood, lead to a retest of November’s life-of-contract low at $2.14. On the upside, immediate resistance is seen at the top of the aforementioned gap up to $2.595. Once above that level, the market can expect selling in the $2.67-73 area, technicians agree.

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