Trading within a fairly slim 25-cent range, March natural gas futures on Wednesday pushed 6.1 cents higher to close at $7.646 as traders eyed the potential for yet another withdrawal report exceeding 200 Bcf when the Energy Information Administration (EIA) releases storage data for the week ended Feb. 16 on Thursday morning.

Following the last two withdrawals of 224 Bcf and 259 Bcf, the industry appears to be anticipating a pull in the neighborhood of 220-230 Bcf. The prompt month Wednesday traded between $7.500 and $7.750 before closing.

“I don’t see the market having a strong rudder here. The weather outlook appears pretty neutral to me, so I just don’t see a whole lot of strong weather-related price swings over the next few weeks,” said Tim Evans, an analyst with Citigroup in New York. “We may have to wait for the market to get comfortable with that and begin to focus on the next seasonal concerns, which are going to be summer heat and hurricane prospects.”

Despite the lack of supportive weather on the horizon, Evans said the current grind higher could have to do with the overall natural gas storage picture. “In a general sense, my favorite market indicator is the year-on-five-year average surplus. As long as that surplus is dropping, you tend to have support for price over the intermediate term,” he said. “If you have a falling surplus or a growing deficit, that is a fundamental trend that supports an uptrend in price.

“We also find ourselves looking at another significant storage withdrawal report for Thursday. I’m calling for a pull of 225 Bcf. Most years that is a big number, but this year we are stringing three big withdrawals in a row, which is gradually taking down that surplus. At the very least, that is taking something away from the downside risk in the market. I’m not sure it adds much to the upside potential because we don’t have any consistent bullish weather outlook as this winter’s days are numbered.”

Evans noted that there are probably some “disappointed” bears out there that figured they would be in the driver’s seat by this time — with the biggest withdrawals and the coldest weather now in the rear-view mirror. “Their whole fundamental reason for being short is now coming to fruition here, but they are wondering why their account is still losing money,” he said. “There is always a difference in the market between being right and making money. You called the fundamentals and you had the weather report nailed well before the average person in the market, but please send us a check for this amount.”

A Reuters survey of 22 industry players produced a range of withdrawal expectations from 196 Bcf to 235 Bcf and a consensus estimate of 223 Bcf, while the ICAP storage options auction Wednesday produced a pull expectation of 229 Bcf. According to the EIA, 120 Bcf was removed last year for the week while the five-year average withdrawal is 137 Bcf.

Golden, CO-based Bentek Energy’s Flow Model is also looking for a 229 Bcf pull, which would reduce the year-over-five-year average surplus to 10.5%. Bentek said it expects a 154 bcf withdrawal from the East region, a 62 Bcf withdrawal from the Producing region and a 13 Bcf pull from the West region. Bentek’s Daily Storage Range report for this storage week indicated a withdrawal range of 218 Bcf to 238 Bcf with a midpoint of 228 Bcf. Bentek’s Supply/Demand Balance view in its Weekly Market Recap published last Friday also indicated a 228 Bcf withdrawal estimate.

Some market technicians see a developing case for the end or the pervasive market decline, which saw spot futures trade as high as $9.050 on Nov. 30. “Tuesday’s price action much more closely resembles bottoming action than it does congestion,” said Walter Zimmerman of United Energy. His analysis shows a close above $7.825 as the 0.7862 retracement of the $8.035 to $5.740 decline that is necessary to reinforce bullish expectations.

“Peg $8.340 to $8.470 the next potential resistance zone on a decisive close above $7.830 as the 0.7862 retracement of the $8.035 to $5.740 decline,” he said.

Some weather developments may support the bullish technical outlook. MDA EarthSat in its latest 11-to-15 day outlook shows cooler temperatures in the Midwest and Northeast. “The American and European ensembles continue to support a general seasonal to below-normal temperature regime in the Midwest and East for this [11-to-15-day] time period,” MDA EarthSat said in a report.

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