Departing from the previous three days of trading this week when the cash market moved in lockstep -- higher on Monday and Wednesday and lower on Tuesday -- the nation's average's on Thursday produced a mixed bag, which was impacted a bit by the morning's "bullish" natural gas storage report from the Energy Information Administration for the week ending March 11.

Most spots in the East and along the Gulf Coast saw prices decline by a few pennies with a few northeastern spots falling by a nickel to 15 cents. However, the Midcontinent and West regions were a mixed bag of pluses and minuses. Midcontinent averages saw changes of a few pennies in either direction while Rockies spots mostly gained less than a nickel with a few small declines mixed in. West of the Rockies displayed gains of less than a dime.

Heading into Thursday morning's natural gas storage report for the week ending March 11, most industry estimates were in the low- to mid-40s Bcf. The Reuters survey was expecting a 45 Bcf draw, while the Dow Jones and Bloomberg surveys were calling for pulls of 44 Bcf and 42 Bcf, respectively. One of the exceptions to the low- to mid-40s Bcf consensus was Tim Evans with Citi Futures Perspective in New York. He was on the record with a 53 Bcf draw expectation. The actual 56 Bcf pull that was revealed ended up surprising many, which was reflected in both the cash and futures market.

"The net withdrawal of 56 Bcf was a clear bullish miss compared with consensus expectations and close to the five-year average rate," said Evans. "Storage is now 31 Bcf lower than a year ago and just 2 Bcf above the five-year average. In our view, this adds to the case that natural gas is at least somewhat undervalued relative to its storage level."

Traders of the cash market and futures responded. April natural gas ended Thursday's session above the psychological $4 mark at $4.158, up 22 cents from Wednesday's close. Similar moves were seen in some cash regions.

"Cash prices in the Northeast appeared to be falling off pretty fluidly from the start of trading Thursday, but after the storage report, we saw a complete reversal," said a Northeast utility buyer. "I think the storage report, tied in with some recent commentary from analysts on how the Japan crisis is going to shift LNG [liquefied natural gas] demand in a big way, spooked traders.

The trader told NGI that his utility was able to get out of the way while prices were still low Thursday morning. "The good news is we were basically done at 9:45 a.m. EDT, so we ended up getting the low for the day," he said. "I wish we would have actually bought more. It was a pretty large percentage move higher."

The trader noted that increased production from the Marcellus Shale has made pipe transportation a little trickier than it once was.

"We are in the heart of the Marcellus Shale region, so there is a lot of backhaul going on," he explained. "Tennessee Gas Pipeline has been restricting. It's not like the gas is not moving, the restraint is on the backhaul side. Capacity is full, it's just not all going in the same direction, which makes it kind of interesting."

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