Despite a storage injection well within industry expectations, May natural gas futures consolidated lower on Thursday, taking away a sliver of the week’s hefty gains. The prompt month closed at $8.064, down 12.8 cents on the day, but still 92.9 cents higher for the week.

After the Energy Information Administration (EIA) reported that 47 Bcf was injected into underground storage for the week ended April 14, May natural gas dropped to $8 from pre-report trading levels of $8.100. Prices then moved even lower a couple of minutes later in reaction to a $1 drop in crude oil futures Thursday morning. Expiring May crude oil futures traded at $71.15/bbl just after 10:45 a.m., but ended up terminating at $71.95/bbl, down 22 cents on the day. Prompt month natural gas reached a low of $7.875 before rebounding higher.

“While we could be following crude lower here, I am not sure that is really the case,” said Tom Saal, a broker with Commercial Brokerage Corp. in Miami. “I think the market is simply retracing off this recent run-up. I tend to believe it is more of a technical correction. The one thing that is for sure is the fact that we busted out of that $6.65-7.65 range. Now, I think the market is going to drift down and consolidate, while it awaits more news…”

Saal said the storage report really was no surprise. “We are transitioning from withdrawals to injections, so the numbers are expected to be on the thin side,” he said. “During this period, the numbers are pretty difficult to predict. There was not much of a market reaction initially to the number this week.”

The injection was just under last year’s 49 Bcf injection, but significantly larger than the five-year average injection of 33 Bcf. A Reuters survey of 25 industry players had been calling for a 52 Bcf build, while the ICAP derivatives auction Wednesday afternoon revealed a consensus injection of 42.6 Bcf.

As of April 14, working gas in storage stood at 1,761 Bcf, according to EIA estimates. Stocks were 425 Bcf higher than at the same time last year and 678 Bcf above the five-year average of 1,083 Bcf. Working gas levels in the Producing region rose 21 Bcf last week, while storage in the East and West regions chipped in 19 Bcf and 7 Bcf, respectively.

Jay Levine, a broker with enerjay LLC, said he believes the petroleum and natural gas market moves are just getting started. “I seriously don’t think you’ve seen anything even remotely resembling a short-squeeze — not of the magnitude I’m expecting — and that’s just a matter of time,” he said. “I’d be keying off big round numbers the next several sessions, if not several next weeks — in crude and in natural — and [I would recommend being] extra cautious about picking your spots and making your decisions.”

With a general lack of fundamental news, traders are citing the continuing jump in oil prices as the reason for the recent rise in natural gas futures. “Natural gas is just looking at crude oil and following. There is no reason for prices to be at $8.20. If crude were to trade sharply lower, that should drive down natural gas, but it’s tough to sell natural gas when you’ve got $72 crude oil,” said a New York floor trader.

Much of the recent advance has centered around a sympathetic move with crude oil, but expectations of summer weather patterns are now entering the mix. “As we get into the demand season, we are expecting a significant pickup in demand for power generation,” said Michael Hiley, director of trading at Fimat USA Inc. in New York. “You’ve seen an incremental pop in demand on a daily basis and everybody extrapolates that out to the summer months,” he said.

The National Weather Service released its monthly long-term forecast Thursday, predicting above-normal temperatures in major energy markets for the critical months of July, August and September. The entire country west of a line extending from western North Dakota to southwestern Louisiana is expected to see above normal temperatures with the bulk of the temperature anomaly centered in the desert Southwest. The populous energy markets of New England and Florida are also forecast to see higher than normal temperatures, and eastern Pennsylvania, eastern New York and New Jersey are also forecast to experience above normal temperatures.

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