Thursday morning’s natural gas storage report revealing a whopping 216 Bcf was removed from underground inventories for the week ending Jan. 16 hit natural gas markets with a thud instead of a bang, because while the withdrawal was significantly higher than any historical comparison, it fell short of industry expectations.

The 10:30 a.m. EST report from the Energy Information Administration (EIA) revealed that despite the frigid cold that gripped large sections of the country last week, U.S. natural gas supply is currently strong enough to weather the storm. In the minutes leading up to the release, the February natural gas futures contract was trading around $2.900, about 7 cents below Wednesday’s regular session close, as traders adjusted their predictions of the report to a little less bearish. They apparently didn’t adjust enough. In the minutes that immediately followed the number, the front-month contract dropped to a low of $2.814, down 16 cents from Wednesday. The $2.800 level is seen as a key support level, with some industry veterans even calling it a floor (see Daily GPI, Jan. 21). As of 11 a.m., February was hovering between $2.820 and $2.830.

Citi Futures Perspective analyst Tim Evans, who had been expecting a 230 Bcf withdrawal, deemed the report “bearish,” but said the number could be viewed differently from another perspective. “The 216 Bcf net withdrawal for last week was below the consensus expectation, implying a weaker supply-demand balance than a week ago, with moderately bearish implications for the storage flows to follow,” he said. “While disappointing compared with expectations, the draw was still more than the 175 Bcf five-year average rate and so still modestly supportive on a seasonally adjusted basis. It’s just not as supportive as expected.”

Prior to the report, analysts at Tudor, Pickering, Holt & Co. said flow data is implying the week’s production is down nearly 2.5 Bcf/d from December’s peak, presumably on freeze-offs. The counterpoint is that the current 2015 strip is pricing in a greater than 3 Bcf/d oversupplied market. “The market is reasonably assuming freeze-offs are skewing the market to ‘balanced’…so it’ll be worth watching trajectory of supply return just in case freeze-offs are not the sole driver of production declines,” they said in a note early Thursday morning.

Heading into the EIA report, a Reuters survey of 24 industry veterans produced a 193-250 Bcf withdrawal range with an average expectation of a 227 Bcf pull. While falling below that estimate, the actual 216 Bcf withdrawal was well above both the date-adjusted 133 Bcf pull from the same week a year ago, as well as the week’s five-year average draw of 175 Bcf.

According to EIA data, 2,637 Bcf was in natural gas storage as of Jan. 16. Stocks are 199 Bcf higher than last year at this time and 153 Bcf below the five-year average of 2,790 Bcf. The frigid East region led the charge for the week with a 118 Bcf withdrawal, while the Producing Region removed 82 Bcf and the West Region shed 16 Bcf.