As analysts continued to digest the implications of the latest government inventory report, natural gas futures early Friday pared some of their recent gains. 

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The October Nymex contract, set to expire early next week, was down 4.1 cents to $2.207/MMBtu at around 8:45 a.m. ET. November was off 5.8 cents to $2.841.

Natural gas rallied on Thursday as the U.S. Energy Information Administration (EIA) reported an injection of 66 Bcf into storage for the week ending Sept. 1, a figure that seemed to allay concerns over limited remaining injection capacity in the final weeks before winter weather.

The build compared to a 97 Bcf injection recorded for the year-ago period and a previous five-year average build of 80 Bcf. The print also came in well below the 89 Bcf injection reported in the previous week, a figure that had seemed to catch the market by surprise.

“After last week’s rogue print there was extra scrutiny this week, but order has been restored as the 66 Bcf build aligns with our supply/demand model…and suggests that last week’s surprise build was a one-off event,” analysts at Tudor, Pickering, Holt & Co. (TPH) said. “…In our view the risks around storage can be put to bed, as regional balances look like they will sneak by, but, more importantly, the October contract is about to expire, shifting focus firmly into withdrawal season.”

TPH analysts said they’ll be watching liquefied natural gas (LNG) feed gas demand levels closely from here. The arrival of Tropical Storm Beta helped drop LNG feed gas flows from around 8 Bcf/d to an average of about 5.5 Bcf/d for the current week, according to the firm’s estimates.

“However, yesterday’s data showed meaningful bounce backs from Sabine Pass and Freeport, pushing feed gas demand north of 6 Bcf/d, and we expect it to be range-bound between 6-7 Bcf/d until Cameron begins ramping up again, which we expect to start in early October,” the TPH analysts said.

The recent volatility in the natural gas market is likely to continue, according to Bespoke Weather Services. The firm said it saw little rationale in the fundamentals data early Friday to justify the price reversal.

“It simply represents the very fine line we walk with regard to the current storage situation, and it becomes very difficult to assign any fair value, especially to the front of the curve,” Bespoke said. “…Anything goes heading into October’s expiration…though we feel there is risk that the November contract could get dragged lower once October is off the board.

“This could lead to some backing off of prices in winter as well, despite our bullish lean in those contracts on a fundamental basis (pending weather).”

November crude oil futures were down 25 cents to $40.06/bbl at around 8:45 a.m. ET, while October RBOB gasoline was off fractionally to $1.1939/gal.