Halting the string of consecutively lower closes at four, traders on Wednesday pushed January natural gas futures to a high of $7.780 in quiet trading before the contract ended up closing at $7.727, up 4.2 cents on the day.

Despite the close higher, some industry experts said potentially bearish storage data Thursday tied with the expected warm-up next week could leave the market exposed to significant moves lower. While bringing the streak of declines to an end, trade action Wednesday started another trend as the day’s range ($7.600-7.780) stayed within a 20-cent band for the second consecutive day.

“We saw a pretty quiet session Wednesday in natural gas,” said a Washington, DC-based broker. “We saw a little rally in sympathy with the bullish crude report in the morning, but that was about it. With the warm-up forecasts out there, it really doesn’t look very good for the bulls. We have two more days of cold weather and then it looks like we can kiss the rest of the winter goodbye.”

Taking a peek at support lines, she noted that there are a few areas within the $7-8 zone. “Looking at the January chart, the old low that we did back in October was down at $7.440, which should act as excellent support,” the broker said. “Below that, major support resides at $7. Because of the weak weather situation, I think we could get down to $7, especially when you take into account that we erased the whole recent move higher in just the last four sessions prior to Wednesday.”

Natural gas bulls can take some heart in current cold temperatures, which should show above normal accumulations of heating degree days (HDD) in major energy markets. The National Weather Service (NWS) predicts that New York, Pennsylvania and New Jersey will experience 223 HDD, or 19 more than normal during the week ended Dec. 9. For the major industrialized states of Ohio, Indiana, Michigan, Illinois and Wisconsin, 269 HDD, or 36 more than normal, are expected to be realized.

The week ending Dec. 2 saw the NWS do a pretty good job of forecasting HDDs. Its forecast for the eastern states listed above called for 119 HDD, or 68 below normal, and for the Midwest 143 HDD, or 72 below normal. The actual figures came in at 104 HDD for New York, New Jersey and Pennsylvania and 136 HDD for Ohio, Indiana, Michigan, Illinois and Wisconsin.

The below normal accumulations of HDD are expected to be reflected in Thursday’s 10:30 a.m. release of storage figures. According to a Bloomberg survey of 15 analysts, 13 Bcf is anticipated to have been withdrawn from storage for the week ended Dec. 1. The range was from unchanged to a draw of 45 Bcf.

“Most reports I have seen are looking for a very small withdrawal,” said the DC-based broker. “I even saw one that was calling for a 1 Bcf injection. Either scenario isn’t going to help the bulls very much.”

A Reuters survey of 20 estimates expects approximately 15 Bcf to be removed from storage for the week, while the ICAP storage options auction on Wednesday showed a consensus 9 Bcf withdrawal.

Bentek Energy’s Flow model report is projecting a net storage withdrawal of 6 Bcf, resulting in 3,411 Bcf of gas in storage, which is 9.2 % above the five-year average and 3.3% over the five-year high. Bentek said its Flow model calls for a 3 Bcf injection in the East region, an 8 Bcf injection in the Producing region and a 17 Bcf withdrawal in the West region. Bentek’s Supply/Demand Balance model suggests a storage withdrawal of 7 Bcf. “The 1 Bcf differential between Bentek’s Flow model used in this report and the S/D Balance report prediction is the closest we have seen the numbers since we started publication of the S/D Balance number,” the company said.

The number revealed Thursday morning will be compared to last year’s 58 Bcf withdrawal and a five-year average of 63 Bcf.

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