Wednesday’s rebound in natural gas futures values proved short-lived after the Energy Information Administration (EIA) reported Thursday morning that only 67 Bcf was removed from underground storage for the week ended Dec. 5. The January natural gas futures contract responded bearishly to the report in morning trade before closing at $5.598, down 8.8 cents from Wednesday’s close.

Heading into the 10:35 a.m. EST report, January natural gas was trading at $5.704. In the minutes that immediately followed, the front-month contract plunged to $5.520. The contract put in a low of $5.508 at 10:50 a.m. EST before rebounding a bit in the afternoon.

In acknowledging that he was looking for a 90 Bcf withdrawal, Citi Futures Perspective analyst Tim Evans called the actual storage report bearish. “This is the second consecutive bearish miss, reinforcing the idea that the supply-demand balance has shifted,” he said. “This would have ongoing bearish implications for the forward storage outlook as well.”

Hencorp Becstone Futures LC broker Tom Saal said he was not surprised by the market’s reaction or its current price level. “The industry was looking for a pull in the 80s and we got a 67; however, the overall level of gas that is available really hasn’t change that much,” he said. “The market acted on the expectation of an 80 Bcf draw, so when the lower number came in, the market sold off. We are still holding the range that has been established over the last few days.

“I think we might be able to keep a five in front of this price for a bit. We are getting some pretty cold weather, but with storage being at the level it is, supply is currently handling the situation,” Saal added. “I think we are probably adequately priced here. If this cold weather holds for a while, we could find our way to higher prices. However, if the weather breaks at all, we could certainly test the lows again.” The current low for the move was set on Tuesday at $5.458.

Going into the report, most industry watchers were looking for a withdrawal between 70 Bcf and 85 Bcf. Evergreen, CO-based Bentek Energy said its flow model indicated a withdrawal of 70 Bcf, while a Reuters survey of 23 industry players produced a withdrawal expectation range of 65 Bcf to 112 Bcf with an average pull expectation of 83 Bcf.

In addition to being bearish when compared to industry expectations, the reported storage pull was also anemic when compared to last year’s 129 Bcf pull for the week and the five-year average withdrawal of 108 Bcf.

As of Dec. 5, working gas in storage stood at 3,291 Bcf, according to EIA estimates. Stocks are 45 Bcf less than last year at this time and 110 Bcf above the five-year average of 3,181 Bcf. The East region removed 58 Bcf for the week, while the Producing and West regions withdrew 8 Bcf and 1 Bcf, respectively.

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