By Sumit Roy
Natural gas was last trading up by almost 2 percent to $3.75/mmbtu after the Energy Information Administration reported that operators injected 90 billion cubic feet into storage last week, at the lower end of the 87 to 97 bcf build that most analysts were looking for.
However, the injection was above last year's build of 72 bcf and the five-year average build of 85 bcf.
In turn, inventories now stand at 3,577 bcf, which is 148 bcf below the year-ago level and 57 bcf above the five-year average (calculated using a slightly different methodology than the EIA).
The weather last week was a bit milder than seasonal norms.
The Edison Electric Institute said that utilities generated 73,767 GWh in the week ending Oct. 5, which was 2 percent above the same week a year ago.
Looking forward, the NOAA's 6- to 10-day outlook calls for warmer-than-normal temperatures across the East Coast and parts of the South, delaying the start of the winter heating season.
NOAA 6- TO 10-DAY OUTLOOK
Meanwhile, the number of rigs drilling for natural gas in the U.S. rose by two to 378 last week.
Natural Gas Rig Count
Bottom line: The latest inventory data from the EIA were neutral, as the surplus against the five-year average rose from 52 to 57 bcf.
Natural gas has risen about 10 percent from recent lows, as the typical pre-winter rally gets underway.
We can't rule out a move to $4/mmbtu, but it will be difficult to sustain those prices given expectations for mild temperatures for the rest of October.
As we wrote last week, the bias for natural gas during the first half of winter is typically to the upside. Thus, we will look for buying opportunities on any sell-offs.