Following the market's recent tradition of following a large spike with a similar collapse a day or two later, January natural gas futures answered Wednesday's 21.3-cent jump with a 17.1-cent drop Thursday to close at $4.435.

Following the news from the Energy Information Administration (EIA) that 89 Bcf had been withdrawn from underground natural gas storage for the week ending Dec. 3, futures traders weren't exactly sure how to treat the fresh data. While the draw was much larger than historical comparisons for the week, some market experts had been expecting a withdrawal in triple-digit territory.

Heading into the 10:30 a.m. EST report, January futures were trading at $4.585. Immediately after the news, the prompt-month contract recorded a $4.631 tick before trailing lower to $4.521. As the afternoon progressed, January futures put in a $4.410 low before inching higher to close.

In the days leading up to the report, most industry surveys were looking for a withdrawal in the mid-80s Bcf, but Bentek Energy was on the record with a 78 Bcf pull expectation. While expecting a whopping 108 Bcf draw, Citi Futures Perspective analyst Tim Evans acknowledged that the actual 89 Bcf draw was "moderately supportive" and likely gives an idea of what to expect in subsequent data dumps.

"The net withdrawal of 89 Bcf was slightly more than the consensus expectation and above the 74 Bcf five-year average and so generally supportive," Evans said. "It was less than our own model projected, but that exposes more of the limitations of our modeling than it says anything else. The market can also now look ahead to the larger storage withdrawals that will follow in the weeks ahead. The report was generally constructive and should keep the upside open for prices."

The 89 Bcf draw was also much larger than last year's date-adjusted 55 Bcf pull.

Bentek did hit the nail on the head that this report would mark the first week that all three storage regions would post withdrawals. The East Region led the charge by removing 51 Bcf, while the West and Producing regions lightened their loads by 21 Bcf and 17 Bcf, respectively.

As of Dec. 3, working gas in storage stood at 3,725 Bcf, according to EIA estimates. Stocks are now 57 Bcf less than last year at this time and 332 Bcf above the five-year average of 3,393 Bcf.

Meanwhile, Big Brother is watching. The Commodity Futures Trading Commission (CFTC), preparing to act on new position limits rules next week, has been scrutinizing the markets, and some commissioners don't like what they're seeing.

In the Commission's latest meeting on the implementation of the Dodd-Frank Wall Street Reform Act, Commissioner Bart Chilton on Thursday urged fast action on the new measures, saying there was new speculative data showing "more positions coming into markets than ever before. There is some disagreement about the impact of speculators on prices, but any impact is unacceptable. We have just seen gas prices raised 10 cents; crude's around $90; it has gone up $7 in two weeks." There have been large concentrations of trading "with more than 20% by a single trader in natgas." The CFTC is preparing to move expeditiously on rules for the spot month, but the rules for all months would require more data collection by the Commission (see related story).

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