Natural gas futures continued to defy gravity Wednesday afternoon as traders refused to sell the market despite the announcement by the American Gas Association (AGA) that only 64 Bcf was pulled from storage last week. That lack of selling pressure combined with the cold temperatures across much of the midwestern and eastern United States gave bulls the confidence they needed to boost the April contract higher on its first day as the prompt contract. April finished at $2.427, up 3.8 cents for the session and just off its high for the day at $2.44. At 71,577 contracts, trading volume was light.

According to the AGA, 10 Bcf and 54 Bcf were withdrawn from the Producing Region and Consuming Region East, respectively, for the week ending Feb. 22. Meanwhile, the Consuming Region West, which saw extremely mild temperatures during that time period, experienced no net change in the amount of gas in storage. Gas stocks now stand 57% full at 1,880 Bcf.

The 64 Bcf total withdrawal was undeniably bearish as it fell below consensus estimates in the 80-90 Bcf range and at the bottom end of the absolute range of expectations from 64 Bcf to 110 Bcf. Last year at this time the market pulled 101 Bcf out of the ground, leaving storage at 859 Bcf, 1,021 Bcf less than current levels.

Yesterday marks the second Wednesday in a row that the market has managed to shrug off a bearish storage report. Last week, the market dipped only 1.2 cents on Wednesday after learning that 112 Bcf had been drawn from storage the week prior. The March contract then experienced a two-day 8.5-cent surge to top out at $2.47 on Friday. Expectations ahead of that report had centered on a 110-130 Bcf pull.

Traders were quick to point to the influx of cold weather this week as the key element to the price gains. High temperatures across much of the Southeast struggled to reach into the high 30s yesterday, and that pushed cash prices higher at most trading hubs. NGI’s Henry Hub price averaged $2.48, up 3 cents from Tuesday. However, most traders are a bit mystified by the screen’s strength and note that even the tried and true strategy of “buying the rumor selling the event” is not paying dividends this time around. “We ran up on the cold weather forecasts last week. If this market were true to form, we would have come right back off when the cold weather hit,” a cash trader said yesterday.

In daily technicals, April has overhead resistance at recent tops of $2.44 and $2.51. Additional selling is possible up through the chart gap at $2.55. There is more wiggle room on the downside, however. The first level of support is seen in the low $2.20s where a rising trend channel could rebuff a light selling surge. A break lower would likely put pressure on the Jan. 28 low at $2.06.

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