Unlike last week, there were no bells or whistles Thursday morning as the Energy Information Administration (EIA) reported that 20 Bcf was removed from storage for the week ended Jan. 6. While the number was well within industry expectations, February natural gas futures ultimately broke below the psychological $9 level for the first time since the September contract did it in Aug. 2005, settling Thursday at $8.943, down 29.5 cents from Wednesday’s close.

The 20 Bcf withdrawal was within industry expectations, in sharp contrast to the 1 Bcf injection reported last week, which caught everyone off guard and even had some market players crying foul. February natural gas was trading at $9.280 prior to Thursday’s 10:30 a.m. EST report. In the minute following the report, the prompt month spiked to $9.405 before appearing to bottom out at $9.200 just before 11 a.m.

However, following one more run-up to the contract’s high for the day, prompt month natural gas appeared to respond lower to a breakdown in February crude. February natural gas put in a low for the day of $8.910 before inching higher to settle.

“Crude was showing some strength early Thursday, but as soon as it backed off a little in the afternoon, natural gas fell lower,” said Brad Florer, a broker with ICAP Energy. “As soon as traders saw crude backing up a little bit, everyone started selling natural gas.” February crude peaked at $65.05/bbl on the day before collapsing back to settle at $63.94/bbl, unchanged from Wednesday’s settle.

Summing up the gas side of things, Florer said, “The weather’s nice outside and we are under nine bucks. I think there are two things that are currently holding us up right now and preventing the bottom from completely falling out. Number one is the fact that we are oversold and number two is the recent strength in crude futures.”

The factor Florer noted was the historically tiny gas storage withdrawal. “Even though people expected this week’s report to reveal a smaller than normal withdrawal, once the number comes out and people crunch the data and stick it into their models, the bearishness comes out,” he said. “Looking at the current storage situation and then projecting what things are going to look like down the road, people are realizing that we have tons of gas, especially if the weather remains unseasonably warm.”

Looking at hard and fast support levels for natural gas, Florer joked that zero dollars “is big support, but below that I don’t have anything.” In all seriousness, the broker said the $8.850 to $8.870 area could offer “some” support.

“If you paint in broad strokes, you could kind of say we tested that area Thursday,” he said. “Below that I have $8.500, but these support lines are really weak. The first really good support level in my opinion doesn’t show up until you get into the $6 handle. I think people are still feeling gravity on this market and that is not going to change unless weather shows up or crude rallies hard.”

As for cold weather, Florer said there is not much time left for colder temperatures to impact this market. “We only have a couple more weeks to get through,” he noted. “In two weeks, if there is still nothing on the weather radar, I don’t know what is going to hold this thing up.”

Estimates for the storage report this week were a little scattered as industry players remained mystified by the previous week’s 1 Bcf injection shocker. A Reuters survey of 20 industry players showed withdrawal estimates ranging from 10 to 60 Bcf, with the average prediction looking for a 25 Bcf pull. Golden, CO-based Bentek Energy projected a storage withdrawal of 15 Bcf, calling the East and West region statistics almost perfectly.

During the same week last year an 88 Bcf withdrawal was reported, and the five-year average withdrawal for the week is 184 Bcf. As of Jan. 6, working gas in storage was 2,621 Bcf, according to EIA estimates. Stocks are 2 Bcf less than last year at this time and 276 Bcf above the five-year average of 2,345 Bcf. The East region recorded a 29 Bcf withdrawal for the week, while the West removed 2 Bcf from underground stores. The Producing region ended up injecting 11 Bcf.

Bentek Energy expected to see a 28 Bcf withdrawal from the East region, a 2 Bcf withdrawal in the West region and a 15 Bcf injection in the Producing region.

Wednesday afternoon’s ICAP-Nymex storage options auction, which allows traders to hedge against or bet on the storage number, almost hit the actual withdrawal number on the head. The auction zeroed in on a 20.6 Bcf withdrawal for the week. Last week, ICAP was off by 34 Bcf.

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