Capping another tumultuous trading week, the natural gas futures market tumbled lower on New Year’s Eve in selling surges both before and after the release of bearish storage data featuring a paltry 80 Bcf net withdrawal. Within minutes of the report’s release, the February contract dropped to $6.05 — 90 cents off the spike high carved out less than 24 hours earlier.

Support there held, however, and the February contract advanced modestly ahead of the early close on Wednesday. It finished at $6.189, down 41.1 cents on the day and 19 cents for the week.

According to the Energy Information Administration, 80 Bcf was pulled from underground storage facilities during the previous week, dropping inventories to 2,619 Bcf as of Dec. 26. Following on the heels of a string of larger-than-expected storage draws, the small number was a surprise. Not only did the takeaway fall short of the 123 Bcf and 161 Bcf figures registered last year and for the five-year average respectively, but it ducked well beneath the range of market expectations calling for a 101-140 Bcf pull.

“This was a huge bearish surprise no matter how you cut it,” offered George Leide of Rafferty Technical Research in New York. “Our internal number was for a draw of 101, and there was some smart money calling for a draw in the upper 90s, but nobody was looking for a figure that small.” Although he was still a bit skeptical of the number, he did note that the lack of industrial demand due to plant shutdowns over the holidays is hard to gauge.

The trading day was cut short at 1 p.m. EST Wednesday for the holidays, giving traders only an hour to react to the storage data. Had the market had a full session in which to trade, Leide suggests that prices might have broken below key support at $5.94.

That being said, Leide believes traders could use the $5.94 level as a pivot point. “We covered our shorts earlier [Wednesday]. On another move down toward $5.94, buyers could cautiously probe the long side of the market.” However, if the market breaks $5.94 (even on an intraday basis), Leide would be quick to liquidate that position. “We could see $5.70-75 in a hurry,” he warned. On the upside, he sees the market’s chances improving on a move above $6.50-60. A break of sturdy resistance at $7.00 would likely result in a quick 50-cent uptick, Leide said.

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