The weekly withdrawal from storage was slightly below average market expectations of about 90 Bcf but not surprising in light of the week’s warmer than normal weather. Working storage levels at 2,212 Bcf remain incredibly high with 1.1 Tcf more working gas than at the same time last year and 675 Bcf more than the five-year average.

AGA reported that working gas levels last week fell 39 Bcf in the Consuming Region East, 34 Bcf in the West and 9 Bcf in the Producing Region. There is 144% more gas in storage in the Producing Region than at the same time last year. The surplus is slightly less in the East, where levels are 84% higher than last year. In the West, working gas levels are 61% higher than at the same time last year.

Nevertheless, price action following the storage report indicates near-term movement may be to the upside if the market can hold near $2.09 and then reach the high teens, said analyst Ira Hochman of Trot Trading Co. in New York.

“There was some nice support down there [near $2], anywhere from $2.00-04. I thought you had to be a buyer down there especially with the slow quiet developing day. There was not much selling going on,” said Hochman. “The top right now is $2.16-17. We’re were there a few days in a row and couldn’t pushed through it and then went sideways. I think we’ll be in a range between the low $2s and the mid teens for a while. In order to muster a rally, I think some value will have to be created above $2.175. The first step is to stay above $2.095 and then it will have to jump and hold above $2.175 before it can test the $2.30s.”

Hochman said he thinks the market bottomed and is building a base now. “It’s going to take some time. If we can build some momentum, it may test the $2.30s.”

Another analyst said he’s also confident the market will begin to build a base with the strong support around $2. He expects “another leg down on the charts” before a small rally can develop, but he’s optimistic the market eventually will climb. “People are reluctant to get short at these lower levels, I think, for good reason,” he said. “The fundamentals are firmly in the bears favor right now, but its been that way for a long while now and that eventually will change with rig counts being down, production tapering off and the economy starting to recover.” However, he admitted it will be quite a while before we see a new trend firmly develop.

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