After bending, but not completely breaking lower on the news that a paltry 52 Bcf was pulled from underground storage facilities last week, natural gas futures prices rebounded Thursday in sympathy with frigid temperatures and spiking cash prices. The February contract finished at $7.094, up 21.6 cents for the session.

The price gains continued in Thursday night’s Access trading session, with the market tacking on an additional 13.1 cents to last trade at $7.225 at 6 p.m. EST. After modest trading activity of roughly 50,000 contracts per day for the first three days of the week, trading in the gas pit roared back to life Thursday with an estimated volume of 73,098.

According to the Energy Information Administration, storage inventories decreased by 52 Bcf to 2,567 Bcf during the week ending Jan. 2. Not only did the withdrawal fall short of the year-ago figure of 86 Bcf, but it also came in below the range of market expectations centered on a 56-90 Bcf takeaway. Supplies are now 236 Bcf above last year’s level and 196 Bcf more than the five-year average.

“This [storage figure] really sent the market for a loop [Thursday] morning,” said George Leide of Rafferty Technical Research in New York. “Our own internal survey showed an average expectation of a 70 Bcf withdrawal. Nobody was looking for a number this small.”

While no one suggested the market would see such low number, analysts were quick to note that there was a lot of uncertainty about demand over the holiday period. In addition to the widespread shutdown of industrial facilities, there was also a large percentage of commercial buildings that opted to close for one or both of the two abbreviated holiday workweeks.

“Not only are there still questions regarding last week’s shockingly low number, but the various models display more variation than normal… Our estimation for this week’s EIA report is for a draw between 56 and 66 Bcf,” wrote Kyle Cooper of Citigroup in a note to clients Wednesday night. As it turned out, his prediction was closer than any of the others out there.

The market reacted quickly to the disappointing storage data and by 11:10 a.m. EST had sunk a cool 20 cents off its pre-EIA level to carve out a $6.61 low. As it turns out, however, that would be the bottom Thursday as bulls were apparently not ready to throw in the towel. “Sure we may have been overvalued at the $7.25 level, but buying kicked in nicely [on the move lower Thursday],” Leide continued.

Specifically, Leide is interested to see if the market can remain above $7.00 in February futures and $6.82 in March futures. “We did some damage to the charts by nearly gapping lower Wednesday in the February contract (March contract did succeed in gapping lower).”

And while supportive technical features will not hurt bulls’ chances, they will ultimately take a back seat to good old fashioned fundamental analysis as the market reaches the zenith of winter demand. Temperatures are expected to be below-normal across most of the country through at least the middle of January and that has both cash and futures buyers edgy. Buoyed by temperature readings Thursday night expected to drop to 20 degrees below zero across northern New England, northeast delivered cash prices topped out at $17.50.

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