Despite coming in only 4 or 5 Bcf below the industry consensus, Thursday morning’s report that 64 Bcf was pulled from natural gas storage for the week ended Nov. 28 read bearish as January natural gas futures put in a new low for the move at $5.961 before closing just above the psychological $6 level at $6.017, down 33 cents from Wednesday’s close.

If price action was any gauge, traders were actually expecting a storage withdrawal much larger than the 64 Bcf pull reported by the Energy Information Administration (EIA), even though the industry consensus hovered between a draw of 68 Bcf and 69 Bcf. Just prior to the 10:35 a.m. EST report, January futures were trading at $6.357. In the minutes that immediately followed, the prompt-month contract was trading at $6.153. The contract then dropped below the previous $5.990 low for the move to record a $5.961 just after noon EST before rebounding a bit to settle.

“Can someone please explain to me why this storage report was bearish. I just don’t get this sell-off. I think the market is a buy,” said Ed Kennedy, a broker with Hencorp Becstone Futures LC. “Looking at the weather forecasts, there is some serious cold air coming down from Canada for the rest of the month. It is supposed to be eight- to 15-degrees below normal for this time of year in a number of regions. I am most certainly not fur and claws, I am hooves and horns here.” Kennedy correctly predicted that a break below $6 would likely not last long because “there is a lot of scaled-down buying below the market.”

Of course, crude futures continued to add bearish influence as the January contract made yet another low for its own move. The prompt-month crude contract put in a regular session low of $43.51/bbl, down a stunning $103.76 from the record high of $147.27/bbl set back on July 11. January crude went on to close Thursday at $43.67/bbl, down $3.12 from Wednesday’s close. More stunningly, Thursday’s close marked a 47-month low for front-month crude.

Still, the drop in natural gas futures value was a little surprising as the 64 Bcf pull was within industry expectations and not far off the consensus leading up to the report. A Reuters survey of 24 industry players produced a range of withdrawals from 50 Bcf to 95 Bcf with an average pull expectation of 69 Bcf. The actual draw came in inline with last year’s 66 Bcf pull for the week and was nearly 20 Bcf larger than the five-year average withdrawal for the week of 45 Bcf.

Citi Futures Perspective analyst Tim Evans, who had been expecting a withdrawal of 80 Bcf, said the smaller-than-expected pull has readjusted his expectations going forward. “The 64 Bcf withdrawal was below the consensus expectations, although within the range and still above the 45 Bcf five-year average comparison,” he said. “With this figure and updated degree day forecasts, we’re pegging next week’s [draw] figure at 90 (five-year is 108) and the one to follow at 140 (five-year is 128).”

As of Nov. 28, working gas in storage stood at 3,358 Bcf, according to EIA estimates. Stocks are 107 Bcf less than last year at this time and 69 Bcf above the five-year average of 3,289 Bcf. Frigid temperatures in the East last week allowed the region to withdraw 61 Bcf, while the Producing and West regions removed 2 Bcf and 1 Bcf, respectively.

The recent ups and downs of natural gas prices have some analysts scratching their heads. “The accepted reasons for the alternating gains and losses do not immediately seem to intersect at any logical point, with these moves seemingly missing some grander, underlying foundation in this market,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm. “We believe that prices are trying to construct a base for a move higher, ultimately. We could be wrong; prices could be building a continuation pattern before another leg lower.”

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