Even a larger than expected storage withdrawal combined with the forecasted one-two punch of wintry Northeast storms weren’t enough to keep bullish momentum alive Thursday as January natural gas futures ended up closing 21.5 cents lower at $7.193, correcting much of Wednesday’s 32.3-cent spike.

Colder than normal temperatures over a majority of the country last week resulted in a stout 146 Bcf withdrawal from underground natural gas storage. The number, which matched last year’s pull for the week ended Dec. 7, was seen as bullish by traders, but that sentiment didn’t trickle through to the futures market on the day.

The January contract reached a $7.520 high in morning trade, but was trading at $7.330 as of 11:15 a.m. EST, before pushing even lower. Some market experts blamed Wednesday trade for the market’s weak response to the bullish withdrawal. Most of the bullish momentum might have been used up on Wednesday when the contract shot 32.3 cents higher to close at $7.408.

“The larger than expected 146 Bcf net withdrawal is bullish relative to both expectations and compared with the 132 Bcf five-year average,” said Tim Evans, an analyst with Citigroup in New York. “It may also imply a little greater sensitivity to cold that may imply somewhat larger withdrawals on an ongoing basis.”

The large withdrawal confirmed what many already new, which is that it was pretty cold last week. For the week ended Dec. 8, the National Weather Service reported that New York, New Jersey and Pennsylvania tallied 252 heating degree days (HDD), or 50 more than normal. The populated industrial Midwest states of Ohio, Indiana, Michigan, Illinois and Wisconsin aggregated 274 HDD, or 44 more than normal.

Prior to the 10:30 a.m. EST report, some market watchers were expecting a little more upside, but warned the selling was likely to come in at some point. “You will definitely find some sellers up there (30 to 40 cents higher), but it looks like the market has about another 30 to 40 cents on the upside,” said a New York floor trader.

Expectations for the report hovered around a 130 Bcf withdrawal. A survey by Dow Jones of 16 analysts revealed an average estimate of 131 Bcf, and a Bloomberg poll of 17 observers resulted in a median estimate of 130 Bcf. The Bloomberg survey ranged from 123 to 140 Bcf.

As of Dec. 7, working gas in storage stood at 3,294 Bcf, according to Energy Information Administration estimates. Stocks are 32 Bcf higher than last year at this time and 259 Bcf above the five-year average of 3,035 Bcf. The East region removed 101 Bcf, while the Producing and West regions withdrew 35 Bcf and 10 Bcf, respectively.

While inventories just a few short weeks ago were at record levels, some energy analysts say the recent cold snap could see the supply-demand equation changing rapidly. “Storage surplus to 2006 will likely change into a deficit by the end of December.” noted Daniel Guertin, an analyst with Lehman Brothers. “The week-ending Dec. 7, 2007 was the coldest week for the United States on a population-weighted basis since February 2007, and was much colder than any week thus far in this still-early heating season. Temperatures last week averaged 8% colder than normal across the United States, with the Northern Plains, Upper Midwest, and Northeast averaging much colder than normal.”

The Northeast was bracing Thursday for back to back winter storms, which were expected to drop more than a foot of snow in some areas. “The combination of abundant moisture and cold air is producing heavy snow in the Northeast interior, with six- to 10-inches forecast from the Pocono Mountains to Massachusetts,” according to AccuWeather.com. “The second storm that will slam the Northeast this weekend will blossom [Thursday night] and Friday over the Four Corners.”

The forecasting firm noted that cold air will follow the storm as it moves east and north, with temperatures into early next week expected to be “the coldest so far this season.”

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