The Energy Information Administration’s (EIA) Thursday morning report that 64 Bcf was injected into underground natural gas storage for the week ending Sept. 25 pushed working gas levels above the all-time storage record — with five weeks still remaining in the traditional refill season. The injection, which was slightly larger than most industry expectations, allowed natural gas futures values to head lower.

Ahead of the 10:30 a.m. EDT report, the November contract was trading at $4.600, but in the minutes that immediately followed it sunk to trade at $4.500. The prompt-month contract put in a low for the session of $4.439 before closing at $4.466, down 37.5 cents from Wednesday’s finish.

With 3,589 Bcf in working gas inventory, current storage levels are already 41 Bcf above the old all-time record level of 3,545 Bcf, which was set during the week ending Nov. 2, 2007. Last year’s peak of 3,488 Bcf was reached during the week ending Nov. 14, 2008. The traditional refill season ends Oct. 31.

Ahead of the report the industry appeared to be looking for an injection in the low 60s Bcf. A Reuters survey of 26 industry players produced an injection range of 56 Bcf to 67 Bcf with an average build expectation of 61 Bcf. Bentek Energy was projecting an injection of 62 Bcf. The actual 64 Bcf build was smaller than both last year’s 82 Bcf build for the week and the five-year average injection of 68 Bcf.

Citi Futures Perspective analyst Tim Evans labeled the report “mildly bearish” but noted that the comparison to historical builds during the week might reveal some tightening of supply. “The 64 Bcf build was a little higher than expected, although not a bad miss,” the analyst said. The build was “moderately constructive in showing the market continuing to tighten marginally on a seasonally adjusted basis. In the near term, however, we don’t think this report will help November futures fight off the need to converge with a cash market that is far lower, recently trading $3.40-3.50.”

Stocks are now 491 Bcf higher than last year at this time and 481 Bcf above the five-year average of 3,108 Bcf, according to the EIA. For the week the East Region led the charge by injecting 38 Bcf while the Producing and West regions chipped in 19 Bcf and 7 Bcf, respectively.

Analysts at Tudor Pickering, Holt & Co. Securities Inc. said the reports this late in the season with storage levels almost full are really are not that informative. “Stop paying attention to this data for [the] next little while,” they advised. “Yes we’ll write about it, but current trends [are] less meaningful for next month as there are shut-ins, coal-to-gas switching and full storage impacts that will mask information content and distort insight to inherent supply/demand balance.”

If the fall of 2007 experience is any guide, the market may have already discounted record inventories. The spot futures low for 2007 was posted Aug. 27 at $5.192, but from there prices advanced to the high of the year at $8.712, which was reached on Nov. 2 despite record storage supplies. The 2009 spot futures low of $2.409 was reached Sept. 4.

Some traders, however, are circumspect as to whether the market has fully factored in record inventories. “Taking everything into consideration with how much storage is out there, weather, etc., the market should be $4.250, but then you look position-wise [speculative short interest] where people are lined up, if the market gets moving and gets up to $5, it could trade up to $5.500,” said a New York floor trader.

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