In a trading session that rewarded the contrarian viewpoint,natural gas futures tumbled lower Wednesday afternoon after traderslearned that the market withdrew a larger-than-expected volume ofgas out of the ground last week. The March contract shuffled 55cents lower during the last 70 minutes of trading yesterday toclose at $5.707, off 39 cents for the day.

According to the American Gas Association, 128 Bcf was pulledfrom underground storage facilities last week, eclipsing theconsensus 108-118 Bcf estimate that was circulating on the floor atNymex prior to the AGA release. During the same week last year themarket pulled 242 Bcf from the ground and the five-year averagecomparison was 154 Bcf. Storage is now 38% full at 1,241 Bcf, 534Bcf less than year-ago levels.

“I was expecting a 110-115 Bcf withdrawal, but our internalstorage guy told us to expect a 127 Bcf pull. I should havebelieved him,” lamented a marketer with a large Houston-basedtrading shop. “This is the second week in a row that the market hasreacted in the opposite direction of what the storage number mightsuggest,” he continued. “Last week we saw a scant 90 Bcf withdrawaland the market moved higher; [Wednesday] we got alarger-than-expected withdrawal and the market tanked. It doesn’tadd up.”

Weighing in on this phenomenon, a New York-based analystsuggested that the moment the storage figure is released, themarket focuses ahead at how the next week’s number will stack up.And while it is too early to predict what the AGA will report nextweek, it is unlikely that it will surpass yesterday’s 128 Bcf pull,much less last year’s 213 Bcf draw.

Looking ahead, traders and market watchers agree that althoughan intermediate bottom is nearing, the March contract still hassome room left to the downside. Support exists at $5.50 and thenagain at failed resistance at $5.25. A break beneath those levelswould pave the way for a retest of “Trend 2000” support in the$4.80 area. Dubbed such because it has survived the entire year,Trend 2000 refers to the gently upsloping trendline that hasdefined several key lows since the $2.125 bottom put in during thefirst week of January 2000.

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