After weeks of digesting larger-than-expected additions to gas storage inventories, traders on Thursday were shocked in the other direction as the Energy Information Administration (EIA) reported that a smaller-than-expected 73 Bcf was injected underground for the week ending April 16.

Heading into the 10:30 a.m. EDT report, the May futures contract was trading at $3.954, but it sprung higher to $4.141 in the minutes that immediately followed. The prompt-month contract ended up recording a high for the day of $4.150 before closing at $4.128, up 17.3 cents from Wednesday’s regular session close.

Citi Futures Perspective analyst Tim Evans called the report “bullish relative to expectations” but bearish when compared to historical comparisons for the similar week.

“The DOE [Department of Energy] reported a smaller than expected 73 Bcf net injection to U.S. natural gas storage for last week,” Evans said. “Interestingly enough, this build was 17 Bcf under our 90 Bcf forecast, whereas the prior 87 Bcf build was 17 Bcf over our estimate. This suggests there are some timing issues more than any overall bearish or bullish shift in the supply/demand balance. The build was still over the 33 Bcf five-year average though, adding to the year-on-five-year average storage surplus, which grows to 286 Bcf off this report.”

A Reuters survey of 28 industry players produced an injection range of 64-90 Bcf with an average build expectation of 78 Bcf.

In addition to being larger than the five-year average build for the week, the actual 73 Bcf injection was well above last year’s date-adjusted 42 Bcf injection.

As of April 16 working gas in storage stood at 1,829 Bcf, according to EIA estimates. Stocks are now 95 Bcf higher than last year at this time and 286 Bcf above the five-year average of 1,543 Bcf. For the week the East and Producing regions contributed 34 Bcf and 31 Bcf, respectively, while the West Region chipped in 8 Bcf.

Credit Suisse analyst Teri Viswanath said that while the “surprise storage release” unsurprisingly “bid up the front of the curve,” she does not expect the rally to have much staying power. “We think that this relief rally will likely be short-lived as the market comes to terms with the likelihood that the year-over-year storage surplus is still well intact,” she added. “It is clear by now that the EIA storage releases in April will play out a similar theme where the absence of weather-related demand will allow utilities to post significant weekly builds.”

The analyst noted that temperatures likely were not responsible for the week-over-week decline in storage injections. Instead, she believes the decreased build last week seems to be the pickup in coal outages, which more than offset the return of nuclear units during the week ending April 16. She added that import/export flows also slightly decreased last week, “as the 0.5 Bcf/d decline in LNG [liquefied natural gas] pipeline send-outs were nearly offset by the 0.3 Bcf/d increase in Canadian imports and the 0.1 Bcf/d decline in Mexican exports.”

While it appears the utilities have gotten a head start on refilling storage facilities this year, Viswanath said the question remains whether next month’s injections will keep the year-over-year storage surplus intact. “There are a couple of key issues we are monitoring, including the possibility of heavier cooling demand and a year-over-year decline in imports,” she said.

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