After extending to new five-month highs on news that a whopping 48 Bcf was pulled from storage reserves during the previous week, natural gas futures sifted lower in the late morning and afternoon Thursday on profit-taking ahead of the weekend. At $5.709, May futures finished in the bottom half of its daily trading range, up 3.2 cents for the session but more than a dime off its $5.83 high notched earlier in the day.

According to the Energy Information Administration, 48 Bcf was pulled from underground storage facilities for the week ending April 11, dropping stocks to a record low of 623 Bcf. Driven by cold temperatures that resulted in heating degree days 30% above average that week, the East Consuming Region accounted for the lion’s share of the draw — 34 Bcf. The Producing Region drew down storage by 14 Bcf and the West Consuming Region, which experienced warmer than usual weather last week, registered no net change in storage levels.

Versus expectations centered on a 10-35 Bcf withdrawal, the storage figure was undeniably bullish. A week earlier the market vaulted higher when the EIA said that 9 Bcf was pulled from storage during the week ending April 4. Factoring in last year’s comparable week showing a 15 Bcf injection, storage is now 883 Bcf less than in 2002. Versus the five-year average of 1,221 Bcf, storage this year is 598 Bcf less.

Considering the bullishness of Thursday’s report, however, the market lacked the fizz that traders expected. George Leide of Rafferty Technical Research was quick to point out that we are still in a shoulder period and a withdrawal of that size was already priced into the market. Specifically, Leide was looking for a 38 Bcf pull, but noted that his clients had called for a draw as large as 60 Bcf.

“A classic case of buy the rumor, sell the fact,” said a Washington, DC-based broker. “Bulls have had a good week so why not take profits ahead of the long weekend? Resistance in the $5.80 area held [Thursday].”

Looking ahead, Leide would not be surprised if the market continued down this week. “We might have witnessed a blow-off top Thursday, in which case the market will continue lower. The first level of support is seen at $5.49-50.” Should the $5.50 area fail to hold, prices could retreat to the $5.25-30 area. On the upside resistance is consistent with the March 13 continuation chart high of $5.88, Leide added.

Although it is too early for his precise estimate, energy analyst Stephen Smith believes that the warm-up experienced by the eastern United States last week will result in a storage injection in this Thursday’s report.

“[The week prior] was extraordinarily cold for this time of year,” he said. Using slightly different regional weightings than the National Oceanic and Atmospheric Administration, Smith calculated 145 population-weighted heating degree days last week versus 103 normally. Using that information, he predicted a 55 Bcf draw, making him one of the few analysts to come close to the 48 Bcf figure announced by the EIA. “We warmed up considerably [last] week and should see a much different number [this] week.”

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