After three days of hyper-volatility and multi-dollar price swings, natural gas futures exhibited some semblance of normalcy Thursday as prices climbed higher in the morning on fresh gas storage data only to ebb lower in afternoon trading. With that, April completed it first day as prompt month at Nymex with a relatively uneventful 9.5-cent gain and $7.485 close.

According to the Energy Information Administration, 154 Bcf of gas was pulled from underground storage facilities last week versus 73 Bcf a year ago and a five-year average of 82 Bcf . Storage stands at 1,014 Bcf, which is a whopping 948 Bcf less than last year and 508 Bcf less than the five-year average.

Despite falling slightly below expectations centered on a 160 Bcf draw, the 154 Bcf figure was not bearish enough to unseat bulls who have clearly been in the drivers’ seat lately. After dropping to $7.15 in the moments after the 10:30 a.m. EST storage release, the April contract rallied to a high of $7.70 at 11 a.m.

By analyzing storage data and heating degree days over the past four weeks, Thomas Driscoll of Lehman Brothers concludes that weather-normalized storage withdrawals have averaged 4.2 Bcf/d stronger than five-year averages. Based on degree day forecasts that suggest it is much colder than normal this week, Driscoll estimates the market will get a 185 Bcf withdrawal in next Thursday’s storage report. A number of that magnitude would easily exceed the year-ago takeaway of 143 Bcf, and would serve to widen the year-on-year deficit near the 1 Tcf level. Looking further ahead, Driscoll concludes that the market will exit winter with only 550-600 Bcf of gas in the ground.

According to the latest six- to 10-day forecast released Thursday by the National Weather Service, below normal temperatures are expected to continue across a large swath of the United States. In fact, the only area of the country that is predicted to see above-normal mercury readings is the Gulf Coast. Normal temperatures, meanwhile, are forecast for a narrow band of the Southeast.

Because the market is almost in the middle of the $6.70 to $8.20 continuation gap created by the rolling of the March to April contracts, George Leide of New York-based Rafferty Technical Research is reluctant to endorse either a buy or a sell from current levels. “We are seeing some good consolidation here and I would like to be a buyer on weakness or a seller on strength in the short-term. In the long-term, I’d have to side with the uptrend until I get better confirmation that a top is in place.”

For Leide, a bullish scenario would involve a break above the top of the gap at $8.20 followed by a pull-back no lower than $7.75. Alternatively, Leide would consult his clients to be sellers on a break of the bottom of the gap at $6.70, with an objective down to $5.90-$6.07.

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