Natural gas futures values received a surprise bump Thursday morning after the Energy Information Administration (EIA) revealed that 207 Bcf had been removed from underground storage for the week ending Dec. 11, which annihilated both last year’s 116 Bcf draw and the five-year average pull of 127 Bcf.

Heading into the 10:30 a.m. EST report, January natural gas futures were trading at $5.607. In the minutes that immediately followed, the contract jumped to the day’s high of $5.911. Prices eased a bit into the afternoon where the prompt-month contract closed at $5.768, up 30.6 cents from Wednesday’s close.

News that a significant bite was taken out of the year-on-five-year average storage surplus did not come as a surprise to some traders, who have been saying for weeks that the arrival of real cold could put more than a dent in the record storage level.

“The fact that 30 to 40 Bcf more than what was expected has been removed from underground storage for the week shows just how quickly supplies can be sucked down in the face of cold weather,” said a New York broker. “Everyone last month was overly concerned about the record levels of gas in storage, but weather has always been the great equalizer. Sure we still have a lot of gas in the ground, but you also have to remember that technically, winter is still a few days from even beginning. If we get some real cold this winter like some of the forecasters are calling for, then gas will continue to fly out of storage and prices will continue to rise…just like we saw Thursday.”

Noting that the Reuters survey and Bentek Energy had been expecting draws of 179 Bcf and 180 Bcf, respectively, while he was predicting a 165 Bcf pull, Citi Futures Perspective analyst Tim Evans deemed the actual 207 Bcf withdrawal as “bullish” and noted that it could reset expectations going forward.

“The 207 Bcf net withdrawal was well above the consensus expectation as well as our own estimate and the 127 Bcf five-year average for the date,” Evans said. “This takes 80 Bcf off the year-on-five-year average surplus in one shot and also raises the base level for evaluating coming weeks. It’s bullish!”

As of Dec. 11 working gas in storage stood at 3,566 Bcf, according to EIA estimates. Stocks are now 381 Bcf higher than last year at this time and 433 Bcf above the five-year average of 3,133 Bcf. For the week the East Region withdrew 93 Bcf while the Producing and West regions removed 75 Bcf and 39 Bcf, respectively.

Some industry watchers said following the previous week’s surprise 64 Bcf draw that the week-to-week reports were getting harder to forecast correctly. What is often a relatively straightforward analysis of natural gas pipeline flows and temperature-based studies of historical weather data has been turned on its ear by the surprise withdrawal of 64 Bcf for the week ending Dec. 4 when the market was expecting about a 46 Bcf pull. Many of the assumptions analysts used to make their estimates have now been called into question.

“I still don’t know how you get to that number,” said a Houston analyst. He added that based on the physical flow models, it was difficult to arrive at 64 Bcf. “I could get to an upper 40s or 50 [Bcf draw], but not 64. I just don’t see how you do it. Bentek Energy, which relies on flow data, had a 40 Bcf estimated draw.” He did add, however, that some of his temperature-based regression models showed withdrawals as high as 64 Bcf, but physical flow data, which is considered a stronger analytical framework, could not get that high.

“You have to ask yourself what went wrong in the analysis, and were there causative factors such as decreased production or increased demand that we just didn’t see,” he said ahead of Thursday’s report, adding that he had “zero confidence” in his 181 Bcf withdrawal estimate for the week ending Dec. 11.

One problem might have been data collection. “A lot of Texas [gas storage] is not reported. The data goes to the Texas Railroad Commission (RRC), but that is not weekly data. There are four or five facilities that don’t report weekly but send figures to the RRC monthly, but we won’t know those figures for another month. Assuming the error came from facilities that didn’t report on a weekly basis, you still have to ask yourself what was happening there that caused the error.”

As long as weather forecasters don’t make errors, cold weather can be expected across the U.S. past Christmas. In its six- to 10-day forecast MDA EarthSat said a cold trough would be focused along the East Coast at the onset of the period , which should provide widespread below- or much below-normal temperature readings. “A storm system is expected to develop in the south-central U.S. by mid period before tracking eastward late. An area of high pressure will descend southward in the wake of the storm, driving temperatures down to much below normal levels across the central and southern U.S. mid to late period,” the forecaster said.

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