The NYMEX July natural gas futures contract closed 25.4 cents higher to a $4.762/MMBtu settlement on Thursday after the US Energy Information Administration reported a lower injection to storage inventories than most expected, prompting fresh concerns about long-term refills.
The contract reclaimed the 20.2 cents it lost trading through Wednesday this week and then some.
The EIA on Thursday reported a 107 Bcf injection to storage for the week ended June 6, below most analyst expectations ranging from 109 to 113 Bcf.
"What a difference an injection makes," said Phil Flynn, Price Futures Group senior market analyst. "It's changed the mood of the market.
"Once we fall below [storage] expectations, then the big picture begins to come in," Flynn said. When the weather is cooler, "we need to see the kind of injections that blow away our expectations, and we just can't see these kind of smaller injections like today" without sparking concerns over the seasonal refill.
"Today's lower-than-anticipated release broke a seven-week streak of outsized injections and triggered immediate futures buying that reversed the 4% week-to-date loss," BNP Paribas analyst Teri Viswanath said.
"Prices continue to drift higher as traders are squeezed from their short positions, and bullish momentum continues," in a mostly technical move, said Aaron Calder, senior market analyst at Gelber & Associates.
Today's prompt-month surge "shows that there is significant buying pressure in this market and that it will have to stay consistently cool this summer in order to keep prices near $4.50," Calder added.
"It's not what the bears want to see," said Elaine Levin, president of broker PowerHouse. She also noted that the energy complex as a whole was moving higher Thursday, notably on concerns regarding new strife in Iraq.
"At the moment, uncertainty still rules," Levin said. "Heat will come in and slow storage injections, so for the short term we could move higher."
But traders are also eyeing forecasts that increasingly point to the development of an El Nino weather pattern this summer, which could make the winter milder than normal, she noted.
The July contract traded Thursday between $4.520-$4.769/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
