After falling during the regular session Wednesday, natural gas futures rebounded to erase that loss in the late afternoon as traders reacted to the news of a larger-than-expected 49 Bcf storage withdrawal.

In reaction to the Energy Information Administration (EIA) decision to release its weekly storage report at 4:30 p.m. EST Wednesday, Nymex held a special Access electronic trading session between 3:15 and 6 p.m. so that traders would not have to wait until Monday to lay off their risk. At 6 p.m. the January contract last traded at $4.24, or 4 cents above Wednesday’s $4.20 settle, which was 3.6 cents below Tuesday’s close.

According to EIA, working gas in storage was down 49 Bcf to 3,047 Bcf as of Nov. 22. Stocks were 203 Bcf less than last year at this time and 100 Bcf above the five-year average of 2,947 Bcf. In the East Region, stocks were 4 Bcf above the five-year average following net withdrawals of 31 Bcf. Stocks in the Producing Region were 39 Bcf above the five-year average of 784 Bcf after a net withdrawal of 20 Bcf. Stocks in the West Region were 56 Bcf above the five-year average after a net addition of 2 Bcf.

Versus expectations calling for a net draw of 20-50 Bcf, the 49 Bcf withdrawal was on the supportive side of the market. A week earlier the EIA reported only a 1 Bcf withdrawal and two weeks ago a 48 Bcf withdrawal was seen. Last year 30 Bcf was added to underground storage facilities. Skewed by a whopping 148 Bcf withdrawal two years ago this week, the prior three-year average is calculated as a 44 Bcf withdrawal.

For Kyle Cooper of Salomon Smith Barney in Houston, the storage withdrawal was quite bullish. “It again indicates a storage change well below the regression model,” says Cooper, who had estimated a 41-51 Bcf withdrawal. “Our temperature-adjusted analysis is continuing to become more bullish….The improving supply/demand balance is mainly associated with declining production as industrial demand at this point is still considered to be tepid.

“The longer-term implication of this trend are clearly bullish and increases our desire to add length on any market pullback,” he wrote in a note to customers Wednesday. Although he warns that it will likely need to be altered once degree day accumulations for last week are available, Cooper thinks this week’s storage withdrawal report will be in the 80-90 Bcf range. Last year the market notched a 4 Bcf net injection.

Although the bullish storage numbers were able to take back Wednesday’s regular session losses, the report lacked the punch it usually has when it is released Thursday morning during the open outcry session. In addition to the limited number of traders available to push the market around Wednesday night, the market’s trepidation can be attributed to the uncertainty surrounding the weather over the next 10 days.

After early last week calling for what looked to be another Ice Age this week, the National Weather Service backed away from those forecasts Tuesday, saying that normal temperatures would set in across much of the nation by this past weekend. Then on Wednesday the six- to 10-day forecast changed again — this time calling for another large swath of below normal temperatures spanning from West Texas to ‘Downeast’ Maine.

For Tom Saal of Commercial Brokerage Corp in Miami, the market will take its next price clue from updated forecasts available Monday morning. “I thought we would get more action [Wednesday] and I am surprised the market did not crash on the moderating forecasts that came out [Tuesday]. We had this sort of set-up a couple weeks ago when it looked like the weather forecasts were going to moderate. We came back into the office Monday morning to find revised [colder] forecasts and the market gapped higher…There is some real apprehension out there that we could see a repeat Monday,” he said.

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