Traders on Thursday shrugged off the news that 115 Bcf was removed from underground storage last week as the number -- while large for this time of year -- was already factored into the market. As a result, April natural gas futures dropped below $7 once again to settle at $6.959, down 12.4 cents from Wednesday's close.

As predicted by some within the industry, the Energy Information Administration's (EIA) 115 Bcf natural gas storage withdrawal report for the week ended March 9 had no real immediate effect on natural gas futures prices as most industry players had already factored in a season-ending storage level of around 1.4 Tcf, which Thursday's report did nothing to alter with three reports left to go.

After working lower in the morning's regular trading session and trading at $7.045 just prior to the 10:30 a.m. EDT report, April natural gas futures immediately put in a $7.075 tick following its release before resuming its path lower.

"On Tuesday and Wednesday I think the market pushed higher to adjust to the potentially bullish storage draw as well as the cold snap that is expected to hit the Northeast on Friday. I think there was a little bit of a build-in into the prices to account for those things. We pretty much got what was expected in terms of withdrawal expectations, so with that bullish opportunity off of the table, futures dropped," said Steve Blair, a broker with Rafferty Technical Research in New York. "I also think there is nothing from any fundamental perspective that could propel the market back any further to the upside than it has already seen, so the natural progression was to bring April back down to that $6.880 to $6.980 range that we have visited the last couple of days."

As for its next direction, Blair said the market needs some new fundamental news or a push to break down much further. "We need something else in order to break down to our major support areas at $6.740 and $6.800," he said. "If we do get down there, we probably have another 35-40 cents to the downside."

Jay Levine, a broker with enerjay LLC, called the report "favorable" to the bulls' case when compared to last year's 59 Bcf pull and the five-year average withdrawal of 79 Bcf. However, he added that there is "no supply shortage -- even if we're ending the season not-quite-as-comfortably as previously imagined -- with other factors likely making up the difference."

Others, like Blair, saw the release of the report as removing potential fuel for a further rally from the bulls. "The net withdrawal was somewhat light on what we had forecast, but it was within the range of market expectations warranting little price reaction," said Tim Evans, an analyst with Citigroup. "What it may do is remove the risk of a bullish surprise, allowing the market to focus more on the forward temperature outlook, which is moderately bearish."

"The range of numbers was from a withdrawal of 110 Bcf to 120 Bcf, so the actual report really split the difference," said Tom Saal, a broker with Commercial Brokerage Corp. in Miami. "The question is what now? I guess we look at the weather picture to see if there is any cold on the horizon. AccuWeather is calling for some lower temps through the Midwest and East, so we will have to see. That is all you've got right now. On the price front, we will have to see if the market can work back below $7 or whether the bulls can sustain their rally from Wednesday."

A number of the industry's estimates were looking for a decline in storage of just more than 100 Bcf. Despite the wide margin with historical comparisons, some did not believe the market should pay it much attention.

"Even if we got a withdrawal north of 100 Bcf, I don't think that would cause much of a ripple in the futures market," a Washington, DC-based broker said Wednesday. "I think everyone has accepted that this large withdrawal will be the result of a cold week that was an aberration quantitatively when looking back at similar weeks over the past years. Occasionally we get one of those, but at this point it is only going to shave off a small amount of the end-of-season storage level. Is it the news that could propel bulls higher? Perhaps, but I see it as more of an excuse rather than a real reason."

Taking a closer look at Thursday's storage report, a Reuters survey of 24 estimates was expecting a median drawdown of 114 Bcf for the week ended March 9, while ICAP's Wednesday storage options auction produced a 110.5 Bcf withdrawal expectation. The range of the Reuters survey spanned from withdrawals of 86 Bcf to 140 Bcf. Golden, CO-based Bentek Energy said its flow model indicated a withdrawal of 110 Bcf, while its Daily Storage Range report for the week indicated a range of withdrawals from 109 Bcf to 125 Bcf with a midpoint of 117 Bcf. The company's supply/demand balance view in its Weekly Market Recap published on Friday indicated a 120 Bcf withdrawal estimate.

As of March 9, working gas in storage stood at 1,516 Bcf, according to EIA estimates. Stocks are 324 Bcf less than last year at this time and 158 Bcf above the five-year average of 1,358 Bcf. Shivering cold in the East last week contributed to that region's 92 Bcf pull from storage, while the Producing region withdrew 22 Bcf and the West region took out 1 Bcf.

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