Riding the bullish momentum that was introduced Tuesday, November natural gas futures roared higher on expiration Wednesday, putting in a high of $6.580 before going off the board at $6.469, up 28.3 cents from Tuesday’s close. Picking up the mantle as front-month contract, December futures added 36.2 cents on the day to finish at $6.778.

The fact that December crude futures were also much higher (+$4.77/bbl) even though most of Wall Street was faltering Wednesday had some pegging the energy commodity strength to the monster gain in equities on Tuesday after commodities had closed.

“After the Dow gained nearly 11% on Tuesday, I think we saw a trickle-through effect on commodities Wednesday,” said a New York trader. “Commodities have been following the equities for the past few weeks.”

Others pinned the run-up of the last two days in natural gas prices to the market’s own technicals and fundamentals. “I think what we are seeing here is a prolonged rebound following a test of strong support,” said Steve Blair, a broker with Rafferty Technical Research in New York. “Last week we got through major support at $6.500 and $6.250, but when we ran into the next level at $6 this week, we failed, which produced the rally. I think the fact that support held at $6 in combination with some cooler weather got the market running a bit to the upside.”

As for the fact that Wednesday was the expiration of the November contract, Blair said anything can happen on a contract’s last day. With the November options expiration Tuesday, Blair said he believed there were a lot of “disappointed people” out there. “There was a huge open interest in the $6 puts, so anyone who sold $6 puts was very happy and the people who bought them obviously were not, especially after the market got down to $5.990 the day before.”

Looking at the rebound of the last two days, the broker said he was not reading too much into the upswing. “I am not surprised by this turn higher. At this time of year, I don’t think a gas price with a $5 handle is really in the cards,” Blair said. “We might test the area again, but the bottom could be in. You never really know.”

Turning attention to the Energy Information Administration’s (EIA) natural gas storage report Thursday morning, it appears that the recent weeks of injections in the 70-90 Bcf range are long gone. For the week ended Oct. 24, industry surveys mostly revealed injection estimates in the 40s Bcf.

“We are not going to get a number as large as we have seen [in] the last couple of weeks,” said Blair. “An injection in the low 40s Bcf area, which a lot of people are looking for, would be much smaller than last year’s build for the week.” The number revealed Thursday morning at 10:35 a.m. EDT will be compared to last year’s 66 Bcf build and the five-year average injection of 42 Bcf.

Bentek Energy’s flow model indicated an injection of 48 Bcf, which would bring stocks 3% below the five-year high and 3% above the five-year average. The Golden, CO-based research and analysis firm is expecting a 23 Bcf injection in the Producing region, a 20 Bcf addition in the East region and a 5 Bcf build in the West region.

“Colder-than-normal temperatures in the Northeast reduced injections in the East region, and with a cold front moving through the region this week injections are expected to drop again for the next EIA release,” Bentek said in its weekly storage outlook. “Injections last year totaled 49 Bcf for the rest of the injection season resulting in inventories of 3,539 [Bcf], an all-time high. Inventories could exceed last year’s record if mild temperatures hold through the month of November allowing for 144 Bcf of injections.”

Weather is expected to call a lot of the shots over the next few weeks. Although much-below-normal temperatures are forecast for the next two days in eastern markets, weather bears may want to hold on to their short positions. Forecaster MDA EarthSat in its Wednesday morning six- to 10-day forecast said cooling in the East is limited mainly to the first day or two of the period before ridging builds eastward in advance of storminess moving from the West out onto the Plains. “Temperatures across the Midwest and eventually the East look to rise into the 60s, with 70 not out of the question,” said meteorologist Matt Rogers. He added that the same conditions building the warmth for much of the Midwest and East also act to cool the West.

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