If you trade natural gas, yesterday was a good day to be glued to your chair. Approximately eight minutes ahead of its scheduled 2 p.m. EDT release, the American Gas Association reported that a whopping 106 Bcf was added to underground storage facilities during the week ending June 15, bringing working gas in storage levels to 49% full at 1,609 Bcf. Futures reacted instantly, tumbling 15 cents to $3.75 just 10 minutes after the report was released. The prompt July contract would never recover from the initial selling surge and finished 24.7 cents lower at $3.734.

According to an AGA spokesperson, the AGA’s webpage, which controls the dissemination of the report to all the news and wire services, was “inadvertently updated pre-maturely” as a result of human error. Although prices responded quickly to the news, traders on the floor at Nymex were somewhat slow to react, commented a risk manager. “Some people knew the number was out, and they immediately sold it down to the $3.83 level. But it wasn’t for a few minutes that all the traders in the pit were aware of the number.”

While acknowledging that the report was undeniably bearish, a broker suggested that the early announcement probably added a little gusto to the initial move lower as the full complement of traders may not have been on hand when the number was released.

I know of at least one party that was pretty severely burned by the early release, the aforementioned risk manager commented. “They trade the pre-AGA period from 1:30 p.m. to 1:55 p.m. and then go flat ahead of the report in an attempt to take advantage of the diminished liquidity afforded during that time. This week, they we’re able to get out of their longs in time.”

Heading into the report, expectations were centered on an 80-100 Bcf refill, which was bearish in its own right as it surpassed last year’s 64 Bcf figure. As it turned out, the 106 Bcf injection dwarfed last year’s refill, adding 42 Bcf to the growing year-on-year surplus. There is now 115 Bcf more in storage than at the same time last year and 42 Bcf more than the five-year average.

For many market watchers, the market’s ability to serve increased cooling load and inject more than 100 Bcf/week, while not suffering a price increase is proof-positive that higher overall gas prices have created some level of demand decay. Accordingly, traders look for a retest of prior lows at $3.67.

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