Bulls hoping for a home run storage withdrawal for the week ended Jan. 9 were sorely disappointed Thursday morning as the Energy Information Administration (EIA) reported that only 94 Bcf was withdrawn despite chilly temperatures last week. February natural gas futures, which Wednesday broke below $5 for the first time since Sept. 2006, spiraled even lower following the 10:30 a.m. EST report’s release. The contract ended up closing at $4.843, down 12.7 cents from Wednesday’s finish.

Just prior to the release, February natural gas was trading at $4.900, but in the minutes that immediately followed, it sunk to $4.742, which marked a low for the day and for the move. Over the last three sessions, the front-month contract has lost 69.9 cents, or 13% of its value.

While the 94 Bcf draw was in-line with last year’s 91 Bcf draw for the week and the five-year average draw of 88 Bcf, it came in approximately 10 Bcf shy of most industry estimates. “The 94 Bcf net withdrawal from last week was a third consecutive report featuring withdrawals below expectations, reinforcing the idea that the supply/demand balance in the market has weakened,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “Still rising supply and weak industrial demand are the most likely culprits. The withdrawal was still above the 88 Bcf five-year average, but that’s a consolation prize at this point.”

“We’re in a strange new world here,” said Ed Kennedy, a broker with Hencorp Becstone Futures LC in Miami. “It seems like the bears are firmly in charge here and the economy has a lot to do with it. A lot of people are talking up the fact that the economy is cooling off faster and harder than people expected…worldwide. The numbers seem to be bearing that out. While the bears are in control, I have absolutely no interest in the short side with a four in front of the price. There is support at $4.750, but you have to remember that we are in a different kind of market than the norm, so I don’t know where this thing is headed right now.”

Despite the bearish tint, Kennedy warned that winter is not over just yet. “On the flip side, we can pull an awful lot of gas in a hurry with these current temperatures. Don’t forget, temperatures are supposed to stay below normal through the end of the month with the exceptions of the Mexican border and Gulf states. There is still time.”

Going into the report a Reuters survey of 23 industry traders produced a range of draw estimates between 89 Bcf and 137 Bcf with an average withdrawal expectation of 106 Bcf. Evergreen, CO-based Bentek Energy said its flow model indicated a 101 Bcf withdrawal.

As of Jan. 9, working gas in storage stood at 2,736 Bcf, according to EIA estimates. Stocks are still 28 Bcf higher than last year at this time and 81 Bcf above the five-year average of 2,655 Bcf. The East region led the charge with a 72 Bcf pull, while the West and Producing regions withdrew 19 Bcf and 3 Bcf, respectively.

The economy appears to be winning the price driver competition. “At this stage, the economy has effectively won the tug-of-war with winter temperatures,” said Peter Beutel of Cameron Hanover, a Connecticut-based energy consulting firm. He added that the cold blast now attacking the Midwest and East “only made traders think about the unlikelihood of deeper dips in temperatures as the winter continues. The market reaction was that these readings are the worst we are likely to experience this winter; after January ends, there is typically a gradual warming into spring. This market is clearly betting on ample supplies getting us through until spring,” he said.

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