Despite a higher than expected weekly natural gas storage injection of 15 Bcf, May gas futures rebounded from an initial low of $5.630 and were able to piggyback on the crude oil market and settle at $5.734, only one cent lower on the day.

The 15 Bcf injection reported by the Energy Information Administration for the week ended April 9 was 5 Bcf higher than the average of industry expectations. The build exceeded the five-year average injection for the week of 9 Bcf and stood in complete contrast to last year’s 46 Bcf withdrawal.

According to the EIA, working gas in storage as of the end of last week stood at 1,049 Bcf. The government agency noted that stocks are 407 Bcf higher than last year at this time and 57 Bcf below the five-year average of 1,106 Bcf, the smallest deficit since the shortfall first emerged in the data from Feb. 6, according to Tim Evans of IFR Energy Services.

The East, West and Producing regions accounted for a 4 Bcf withdrawal and builds of 3 Bcf and 16 Bcf, respectively. Stocks in the East region following this report were 55 Bcf below the five-year average of 528 Bcf, while stocks in the Producing Region were 22 Bcf above the five-year average of 389 Bcf. In the West Region, stocks were 23 Bcf below the five-year average of 188 Bcf.

“I think natural was pulled up by this liquids rally, which really sort of exploded in the afternoon,” a Washington, DC-based trader said. May Nymex crude futures ended its two-day downward slide, jumping 85 cents on Thursday to close at $37.57.

“What’s more disturbing is the fact that the U.S. State Department has now said that they are beginning plans to evacuate all non-essential personnel out of Saudi Arabia and should have it completed by next week,” the trader said. “This is something that is on the front burner that is not good. If we have worries about a terrorist action in Saudi Arabia, I mean that is the big kahuna. There is not anything else that could make this crude market more jittery,” he added, predicting that Saudi Arabian fears will have a direct impact on the natural gas market as well.

Calling the storage number “middle of the road,” the trader said it appears the $5.70 range is “still sticking to us. We sold off 6-8 cents on the storage number’s release. I would say that it was mildly bearish, and we have retraced all of it. I think the storage report is over, done with and out of the way. I still think we are taking our direction from crude.”

Looking to the short term, he said he tends to believe that the futures market is ready is to make a return trip back up to the $6 level. “It hasn’t really given us real reason to doubt it. There is some weakness on the technical indicators, but Stochastics are looking like they want to turn back to the positive side. You’re getting ready to have a positive crossover on the Stochastics, but we are not there yet. If it does crossover, it might lead to that bounce back up to the top of the range.” He added that futures is probably looking more at $6 than $5.50.

Evans said he believes that the 15 Bcf injection was not sufficiently shocking to undercut support for the market, at least as an initial reaction. “Given the warmer-than-normal temperature outlook for next week, the lack of a bullish storage shock may be enough to allow a further decline in prices to develop,” he said. “May natural gas needs to get through minor resistance at $5.80 and $5.85 in order to turn the short-term trend higher again, taking aim at the $6.03 high from Monday as the established resistance bench-mark.”

Evans noted that longer-term resistance is projected for $6.25 and $6.50-6.55 if the market were able to stage a breakout. However, the analyst said a break of Wednesday’s $5.65 low tips prices toward failed resistance at $5.48-5.51 and then the $5.34 low from March 24 as the high profile objectives.

“We note that the market is also working on an outside-down reversal bar on the weekly chart,” he said. “A close below the $5.69 low from March 31 would underscore this pattern and possibly trigger additional selling. There is not that much long vulnerability here, so the market may grind lower on a flow of fresh selling rather than plunge as it might on long liquidation.”

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