Traders who still happened to be in the office received a little surprise on Friday as the Energy Information Administration (EIA) reported that 165 Bcf was withdrawn from underground natural gas storage for the week ended Dec. 21. The larger-than-expected pull helped push February natural gas to a high of $7.410 before the contract closed at $7.386, up 18.6 cents from Thursday’s close and 9.4 cents higher than the previous week’s close.

The February contract — in its first regular session action as front month — jumped higher in morning activity to trade at $7.300 as the storage report was released. The prompt-month contract progressed from there, reaching the $7.410 high before inching lower to close.

While the industry consensus was that the report would reveal the third consecutive triple-digit withdrawal, expectations centered around a pull of 145 Bcf. In fact, the 165 Bcf withdrawal was even above the upper range of Reuters survey respondents, which was 163 Bcf. The larger-than-expected withdrawal was attributed to the winter storms that pounded the Midwest, Plains and Northeast last week.

“Yes it was a big withdrawal, but the more important factor is the change in the weather forecast,” said Ed Kennedy of Commercial Brokerage Corp. in Miami. “AccuWeather along with the other private forecasters are changing their tune. A week ago they were all saying that January was still supposed to exhibit above-normal temperatures, but now they are saying the first two weeks of January are expected to be below normal in the regions that count.

“We are getting some short-covering in futures, but in order to really put the feet of the shorts and funds to the fire, we need a close above $7.600,” he added. “That is not all that far away, but it is also not exactly in the neighborhood either. Weather is king, so anything is possible. AccuWeather is now saying that you can draw a line from Boston down to West Texas…most everything east of that is expected to be above normal, while everything west of that would be below normal. However, the key here is that the Chicago-to-Boston corridor is expected to be below normal over the next two weeks, and that is where all the people live.”

According to, an “unseasonably cold start to 2008” is expected from the northern Rockies to the Northeast. “A large dip in the jet stream across the eastern half of the country will allow plenty of cold air to funnel southward from Canada,” said Eric Wanenchak, a meteorologist with “High temperatures are expected to be 10-20 degrees below normal, with highs around 0 degrees in the Dakotas and Minnesota. Farther to the south, temperatures will not make it out of the 30s in places like Oklahoma City, Little Rock and Nashville. Mild air moving in from the West will allow the thermometer to slowly moderate heading into the first weekend of 2008.”

Kennedy noted that while “skeleton trading crews” were in the office Friday, significant moves were still possible. “There are very few people on the trading floor and the trading desks are slow, but that doesn’t mean you can’t get a move.” He added that the funds, “who have a big short position,” definitely had some people at their desks Friday, in case they “needed to do something in this market.”

The 165 Bcf draw dwarfed historical comparisons, erasing the surplus over last year’s storage levels. Last year for the week, only 49 Bcf was pulled from underground stores. The five-year average withdrawal for the week is 119 Bcf.

As of Dec. 21, working gas in storage stood at 3,008 Bcf, according to EIA estimates. Stocks are 120 Bcf less than last year at this time, but still 220 Bcf above the five-year average of 2,788 Bcf. Brought on by a cold week, the East region removed 100 Bcf, while the Producing and West regions pulled 47 Bcf and 18 Bcf, respectively.

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