Despite news that only 1 Bcf of gas was pulled from storage last week, the natural gas futures market fought its way higher Thursday as traders remained focused on forecasts calling for colder-than-usual temperatures for the end of November. Light profit taking was seen near the closing bell, but it was not enough to erase the bulk of the day’s gains. December finished at $4.351, up 9.7 cents for the session.

According to the Energy Information Administration, there was 3,096 Bcf of working gas in storage as of Nov. 15, down 1 Bcf from the previous week. Stocks were 124 Bcf less than at the same time last year and 98 Bcf above the five year average of 2,998 Bcf. In the East Region, stocks were 1 Bcf above the five year average following net injections of 5 Bcf. Stocks in the Producing Region were 45 Bcf above the five year average of 798 Bcf after a net withdrawal of 9 Bcf. Stocks in the West Region were 53 Bcf above the five year average after a net addition of 3 Bcf.

While some may have seen the withdrawal as bullish versus the year ago injection of 33 Bcf, most market watchers agreed it was bearish because it fell at the lower end of the 0-30 Bcf withdrawal range of market expectations and was well short of last week’s report of a 48 Bcf withdrawal for the week ending Nov. 8.

However, this week’s withdrawal was almost right on the money for Thomas Driscoll of Lehman Brothers in New York. Driscoll predicted a net zero change in storage this week by using heating degree data with some timing modifications.

When the previous week’s 48 Bcf withdrawal surprised nearly everyone compared to expectations of 10-30 Bcf, Driscoll determined that there was a problem in predicting weekly storage withdrawals based on weather data. He noted the disparity between the Sunday-to-Sunday time period covered by the National Oceanic and Atmospheric Administration’s weekly heating degree day data and the Friday-to-Friday time period covered by EIA’s weekly storage report.

“When temperatures are materially different from one Friday-Saturday period to the next, [NOAA] will provide a misleading indicator of the likely storage behavior,” he wrote Wednesday in a note to clients.

According to Driscoll, it is a 39-hour difference in the time frames that contributed to the surprise. Heating degree day data used to estimate last week’s storage report, failed to include the very cold weather on Nov. 1-2, and Driscoll believes the heating degree data used to estimate this week’s storage report also failed to include the very warm data from Nov. 8-9.

“More seasonal weather the 15th and 16th caused us to overestimate demand for the week ending Friday at 9 a.m. We are revising our estimate for this week from a withdrawal of 25 Bcf to a 0 Bcf withdrawal,” he continued. On a preliminary basis, Driscoll looks for 45 Bcf withdrawal in next Thursday’s storage report. He will fine tune this number early next week with actual degree day accumulations.

While storage was decidedly bearish Thursday, the weather outlook remains mixed. Contrasting rather sharply with the bullish six- to 10-day and eight- to 14-day forecasts released by the National Weather Service yesterday, the National Oceanic and Atmospheric Administration, released a fresh 90-day forecast that calls for above-normal temperatures for the northern half of the country from December through February.

In daily technicals, December futures are overbought, leaving the potential for a long liquidation sell-off ahead of the weekend. Should the market tumble Friday, support exists at the congregation of lows this week in the $4.200-215 area. A break lower would mean a test of the 40-day moving average in the $4.16 area, followed by Monday’s low at $4.14. On the upside, resistance is seen at Thursday’s high at $4.40 followed by the psychological ceiling at $4.50.

Because of the upcoming Thanksgiving Day holiday, the next storage report will be released on Wednesday, Nov. 27 between 4:30 and 4:40 p.m. EST. Nymex trading will finish for the long holiday weekend at 2:30 p.m. EST Wednesday, meaning traders will need to wait until the reopening of Access trading Sunday, December 1 at 7 p.m. to trade off the new supply data.

In other news, Nymex announced Thursday that a record $1.2 billion in over-the-counter gas and power transactions were cleared Wednesday, breaking the record of $514 million in cleared OTC transactions set on September 26. Since OTC clearing service were launched on May 31, more than $3.4 billion worth of transactions have been cleared through November 20.

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