Continuing its recent run of unpredictability, the Energy Information Administration’s (EIA) natural gas storage report for the week ended Nov. 21 once again shocked traders and analysts. The 66 Bcf withdrawal for the week was larger than most market watchers were expecting, which combined with a bullish winter weather forecast allowed January natural gas futures to close Wednesday at $6.878, up 49.2 cents from Tuesday’s finish.

Heading into the 12 p.m. EST report, the January contract was trading at $6.369. However, in the minutes that immediately followed, it spiked to a high of $6.700. The bulls were not done, however, as they made a Wednesday afternoon run-up that came in just shy of $7.

“The withdrawal was much bigger than expected and that produced the rally. Most people were looking for a pull in the 44-45 Bcf area,” said Ed Kennedy, a broker with Hencorp Becstone Futures LC. “On top of the bullish report, we just got AccuWeather.com’s forecast for the winter. They have December coming in much below normal, with the overall winter east of the Mississippi reading normal to below normal. The important thing the forecaster notes is that a normal winter in the Chicago-Boston corridor will be colder than the last seven winters.”

Kennedy said AccuWeather.com’s forecast for December should give futures bulls some significant traction. “They are talking about December producing temperatures 20 to 30 degrees below normal,” he said. “They are drawing analogs to the winter of 1989. During that winter, it never got above 10 degrees in New York. In Miami it got into the 30s and they had snow.

“So the bulls certainly have something to talk about,” he added, noting that his first resistance area was at $6.870, followed by $7.360. January futures reached a high of $6.978 in afternoon trading.

Citi Futures Perspective analyst Tim Evans agreed that the number was larger than almost every industry estimate. “The 66 Bcf net withdrawal was bullish relative to expectations and also in comparison with a five-year average withdrawal of 13 Bcf. This drops the year-on-five-year average surplus from 140 Bcf last week down to 88 Bcf in this week’s report.” The actual draw was also much larger than last year’s 7 Bcf withdrawal for the week.

Traders and analysts had been expecting to see the first withdrawal of the season, but many were looking for a pull in the mid 40s Bcf. A Reuters survey of 18 industry players produced a range of withdrawal estimates from 5 Bcf to 68 Bcf with an average pull expectation of 44 Bcf.

As of Nov. 21, working gas in storage stood at 3,422 Bcf, according to EIA estimates. Stocks are 109 Bcf less than last year at this time and 88 Bcf above the five-year average of 3,334 Bcf. The chilly East region led the charge with a 51 Bcf drag on supplies while the Producing and West regions removed 9 Bcf and 6 Bcf, respectively. The EIA released its natural gas storage report one day early due to the holiday-shortened week.

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