“If at first you don’t succeed, try, try again” could have been the natural gas futures market’s motto over the past few days during which it attempted several times to break below the psychological $7.00 level. It finally paid off Thursday as December natural gas futures settled 41 cents lower at $6.873.

It appears that all the prompt month needed was a push from a bearish natural gas storage report. On Thursday, the Energy Information Administration reported that 6 Bcf was pulled from underground storage for the week ended Nov. 12. The first withdrawal of the heating season fell short of the 15 Bcf industry consensus, which also happened to be the five-year average withdrawal figure. A whopping 32 Bcf was extracted from storage for the same week last year.

As a result, December natural gas futures plummeted in morning trade. After gapping significantly lower at the open Thursday, the prompt month continued its descent to reach a low of $6.80 just before 11 a.m. (EST).

“Storage came in where it was expected, but when you’re dealing with higher prices, what’s expected is not bullish,” said Jerry Rafferty of Rafferty Technical Research in New York. “The prices broke down into what we believe will be the biggest support numbers.” Looking at his historical charts, Rafferty said he believes the $6.80 to $6.50 level will be where prices hold.

Commenting on the prompt month’s multi-day attack on the $7.00 mark, Rafferty said, “It had no problem breaking through it Thursday. The contract knocked on the door one too many times.”

Working gas in storage now stands at 3,321 Bcf, which is 166 Bcf higher than last year at this time and 275 Bcf above the five-year average of 3,046 Bcf. The East region (-11 Bcf) was the only area to record a withdrawal, while the Producing (3 Bcf) and West (2 Bcf) regions were still in injection mode. Total working gas is above the five-year historical range.

Advest Inc.’s Jay Levine said that while he had been looking for storage to remain almost unchanged this week, the 6 Bcf withdrawal was well under the 15-20 Bcf the market was expecting. “As with the API/DOE [reports], it doesn’t take much to elicit an immediate reaction/disappointment with the market expecting one thing and getting another,” Levine said. “In the case of natural [gas], you have a market under fundamental pressure on top of fundamental pressure.”

A number of market watchers have said that the mild summer and a winter that has been slow to develop are responsible for the record storage in the ground and downtrend in prices. Another factor influencing natural gas prices has been declining petroleum futures.

On Thursday, December crude and heating oil notched lows of $45.65/bbl and $1.3850/gallon. As an indicator, December crude and December heating oil were as high as $55.65/bbl and $1.61/gallon in late October.

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