Natural gas futures traders took Thursday morning’s “bullish” report that 186 Bcf was removed from underground storage last week mostly in stride in morning trade, but the March contract — in its first prompt-month regular session action — made an afternoon push higher to close at $4.576, up 15.6 cents from Wednesday.

After trading as low as $4.359 in the overnight session, March natural gas on Thursday morning was trading at $4.480 just prior to the 10:30 a.m. EST Energy Information Administration (EIA) report’s release. Immediately following the report, the prompt-month contract spiked to $4.570 before coming back to notch a $4.411 low for the regular session. Around 1 p.m. EST, the contract began its push higher for good.

Despite Thursday’s strength, some market watchers were still unimpressed. “We still have plenty of gas and the overall economy is not going to turn around overnight, so I think the bulls still have some pretty significant hurdles to overcome natural gas futures can turn the corner,” said a Northeast futures trader. “Even with the 15-cent gain, we are still within the trading range that the February contract established over the last few weeks.”

Supply bulls might take heart from Wednesday’s market reaction to the release of bearish crude oil inventory figures. The EIA reported crude oil stocks increased a stout 6.2 million barrels, well above the 2.8 million barrel increase shown in a Bloomberg survey. March crude oil futures rose 58 cents to $42.16/bbl on Wednesday, but dropped 72 cents Thursday to close at $41.44/bbl.

Longer-term analysts expect lower prices. “I think gas is going lower and you may see a $3 handle in the next 30 to 40 days,” said an Oklahoma analyst. He pointed out that under normal circumstances the natural gas market bottoms right about now, late January to early February and he does concede that further out hurricane activity could boost prices. “We could go to $6.500 in the fourth quarter if we see some hurricane activity, but I think it will be hard to get over $6 this spring and maybe into the third quarter.”

The industry labors under abundant overproduction as the current computations by analysts put the supply overhang in the neighborhood of 5 Bcf/d. Going into the EIA report, which reflected the inventory fluctuations for the week ended Jan. 23, most industry withdrawal expectations were for a number between 160 Bcf and 180 Bcf.

“The net withdrawal above expectations implies we should be able to bump up our forecast levels for the weeks ahead, on the assumption that the supply/demand balance has tightened somewhat,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “This could be due to some combination of improved industrial offtake after some extended holiday plant closures or moderation in demand. Beyond that, the report was neutral relative to the 184 Bcf five-year average for the week.”

Ahead of the report, Evans said he expected a 160 Bcf pull, while research and analysis firm Bentek Energy said its flow model indicated a withdrawal of 179 Bcf. While the actual 186 Bcf was in line with the five-year average draw, it paled in comparison with last year’s 240 Bcf reduction for the similar week.

According to the EIA, working gas in storage stood at 2,374 Bcf as of Jan. 23. Stocks are now 34 Bcf higher than last year at this time and 29 Bcf above the five-year average of 2,345 Bcf. The frigid East removed a whopping 131 Bcf while the Producing and West regions withdrew 48 Bcf and 7 Bcf, respectively.

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