Weeks after Halloween’s tricks and treats were gone, natural gas futures traders felt tricked anew Thursday on news of an upward revision in natural gas storage figures by the Energy Information Administration (EIA). News of more gas in storage than first expected along with Thursday’s report of a 16 Bcf build for the week ended Nov. 14 gave the bears the upper hand in morning trade as December futures pushed lower, ultimately settling at $6.316, down 42.7 cents on the day.

Heading into the 10:35 a.m. EST report, December natural gas was trading at $6.406. In the minutes that immediately followed, the prompt month contract had recorded a low tick of $6.201. As of 11:10 a.m. EST, the contract was trading at $6.309.

According to the EIA, the stock estimates for Oct. 31 and Nov. 7 were revised to reflect resubmissions of data by one or more respondents. The reported revisions caused the stocks for Nov. 7 to change from 3,467 Bcf to 3,472 Bcf, and the stocks for Oct. 31 to change from 3,405 to 3,412. As a result, the implied net change between the weeks ending Oct. 24 and Oct. 31 changed from 12 to 19 Bcf, and the net change between Oct. 31 and Nov. 7 changed from 62 Bcf to 60 Bcf.

“The 16 Bcf net injection was a bearish miss on expectations and was also bearish compared with the five-year average net withdrawal of 2 Bcf,” according to Tim Evans, an analyst with Citi Futures Perspective in New York. “In addition, the [Department of Energy] also revised the Oct. 31 data upward by 5 Bcf. In total, storage is thus 21 Bcf higher than where the market thought it was a week ago.”

Hencorp Becstone Futures LC broker Tom Saal said the storage revision was meaningless in the physical sense, but much more significant on the market perception level. “The upward revision wasn’t even a drop in the bucket; it was more like fumes in the bucket. Based off the EIA’s methodology, they need to announce a revision that is larger than a certain number. While it does not change the storage situation, the market likes to react to these things.”

Looking at the current futures price level, Saal noted that there is a lot of open interest in the $6 put currently. “With that kind of interest in that price area, futures could venture in that direction ahead of expiration,” he said. “Options expire Friday, so we will have to see what happens.”

As for whether there is another test of $6 in the cards, Saal said he would not rule it out. “This market has taught me one thing and that is never to rule anything out,” he said. “I think it will be hard to drop down below support at $5.990, but it is not impossible. I’m not ready yet to say it can’t happen.”

Leading up to the report, most industry estimates were calling for the first withdrawal of the season. A Reuters survey of 23 industry players produced a range of expectations from a build of 11 Bcf to a draw of 15 Bcf with an average expectation of a 1 Bcf draw. Evans had been expecting a 15 Bcf withdrawal. In addition to being miles away from the five-year average pull of 2 Bcf, the actual 16 Bcf addition also blew out last year’s “no change” for the week.

As of Nov. 14, working gas in storage stood at 3,488 Bcf, according to EIA estimates. Stocks are now only 51 Bcf less than last year at this time and 140 Bcf above the five-year average of 3,348 Bcf. The East region stood pat while the Producing and West regions injected 11 Bcf and 5 Bcf, respectively.

Looking back at Wednesday’s hefty 22.7-cent gain in December futures, analysts cited weather uncertainty. “I think the market [was up Wednesday] because of a fear factor of how cold will it be and how long will it last. Mother Nature can clearly overwhelm the economy in terms of gas being used. Even if there is no industrial demand, people still have to heat their homes,” said Kyle Cooper of IAF Advisors.

Looking ahead to next week’s storage report for the week ending Nov. 21, traders will still have to deal with the dichotomy of a cool East and warm West. The National Weather Service (NWS) reports that on a population-weighted basis heating degree days (HDD) nearly balance between the two. For the week ended Nov. 22, the NWS forecasts that New England will shiver under 203 HDD, 26 more than normal, and New York, New Jersey and Pennsylvania will endure 199 HDD, or 36 more than the normal seasonal tally. The Midwest states of Ohio, Indiana, Illinois, Wisconsin and Michigan will see 218 HDD, or 32 more than normal. The Mountain West, however, is forecast to have just 107 HDD, or 61 fewer than normal, and the Pacific Coast is anticipated to see 64 HDD, or 35 fewer than normal.

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