November natural gas futures fell hard and fell often in Thursday’s trading. The 10:35 a.m EDT release of Energy Information Administration (EIA) inventory statistics revealed a healthy 70 Bcf injection, slightly less than anticipated but ahead of last year and long-term averages. November fell 35.8 cents to settle at $6.419, and December dropped 35.8 cents as well to $6.619. December crude oil rose $1.09 to $67.84/bbl.

November futures opened about 4 cents lower Thursday morning and the selling was in place before the release of the report. By 10:30 a.m. EDT November had already traded down to $6.525, down 25.2 cents, and the $6.419 settlement was at the low end of the day’s range.

The fall caught some in the producing community off guard. “We haven’t added any more to our [short] positions, although we do have a winter put strip on,” said a Denver trader. He added that many of the company’s Rocky Mountain producer clients had been sitting on the sidelines since basis had blown out so much.

Nymex Clearport reported that the Northwest Pipeline Rockies November Basis Swap settled Wednesday at $3.29 under the Nymex Henry Hub. On Monday the settlement was $3.1575 under.

Typically when futures fall hard as they did Thursday basis will strengthen, but that has not been the case. “It [Rocky Mountain basis] has been very, very weak, and Midcontinent prices are now as weak as those in the Rocky Mountains. For the last couple of days cash prices in the Midcontinent have even been a hair lower than Rocky Mountain prices. Basically there is not enough pipeline capacity to get the additional [Rockies Express] gas from the Rockies out of the Midcontinent.”

“We are hoping prices will get a little pop here, and I’m surprised that with 70 Bcf coming up a little short of expectations that prices didn’t rally a little bit. We are coming into a new [price] level here, and I am having a hard time figuring out where support and resistance is.” He added that considering all the news with crude oil coming off and the weakness in the Dow Jones Industrial Average that “natural gas has been one of the constants out there. It’s come off a little bit, but nothing like the other energy contracts.”

November crude oil terminated trading on Monday at $70.89/bbl, down from $78.63 just a week earlier. On Tuesday the newly minted December contract fell $5.43 to $66.75.

“We are looking for a price pop in order to sell. It just doesn’t seem to be coming,” he said.

The trader may find some solace in that the 70 Bcf injection may be an indication that supplies may be a little less abundant than earlier thought. Citi Futures analyst Tim Evans called the report “supportive,” noting that the market may have rebalanced. “The 70 Bcf in net injections was less than expected and may reflect some drop in supply — Canadian imports, [liquefied natural gas] imports, or U.S. onshore production — that has rebalanced the market to some extent,” Evans noted. However, he did note that the build was still “bearish” when compared to the five-year average build for the week.

Further rebalancing may come in the form of next week’s injection figures. Forecasts call for above normal heating requirements for populous eastern markets. The National Weather Service predicts that for the week ending Oct. 25 New England is expected to endure 136 heating degree days, or 16 more than normal, and New York, New Jersey and Pennsylvania are forecast to shiver under 122 HDD or 18 more than normal.

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