Cash prices traded close to unchanged Thursday with most quotes a penny or two higher or lower. However, Northeast prices shot higher primarily on supportive weather conditions.

The Energy Information Administration reported a storage withdrawal of 82 Bcf, about 8 Bcf shy of what futures traders were looking for and prices collapsed. At the close of futures trading April had tumbled 15.3 cents to $2.463 and May had shed 13.1 cents to $2.579. April crude oil continued higher, posting a gain of $1.77 to $108.84/bbl.

“Algonquin fixed-price for March is bid at $2.91 and the [Henry] Hub is trading $2.32, so 60 cents is basically the spread, but factoring in the daily price Thursday the spread is up to $1.22,” said an eastern marketer. “Temperatures up there are a little cool and they are getting some snow. Most traders tried to get their deals done before the [storage] number came out, but when the screen fell so much obviously people in a buying mode were able to benefit, but sellers were left holding the bag.

“I think this weekend the market is going to come off. Boston is 36 on Friday, but weekend deals are tough to manage. We have retail load and that will be low on Saturday and Sunday and higher on Monday so we have to figure out how to buy for that. Tuesday [in Boston] is chilly and then it warms up. High 50s are expected by the end of next week so we’ll see some really weak prices, I imagine,” the marketer said.

Northeast points pushed higher. Algonquin Citygate was quoted at more than a quarter higher, and deliveries into Iroquois Waddington soared nearly 35 cents. Tennessee Zone 6 200 L was nearly 40 cents higher, and Dracut gained about a dime.

Cooler temperatures were in play in the Midwest as prices rose by a couple of cents. “Tomorrow [Friday] is a little bit of a cold day, a high of 45 and low of 25,” said a Midwest utility buyer. “Thursday is supposed to be up to 55, but by Tuesday of next week it’s supposed to be up to 60. Spring is going to be springing here!”

Quotes across the Midwest were flat to a little higher. Northern Natural Gas at Ventura rose by a couple of pennies, but gas at the Chicago Citygate and on Michcon were flat. Deliveries to Consumers rose a couple of pennies as well.

Prices were pretty flat with a few gains in the Rocky Mountains and at points east even as a brief chill was forecast to blow through the area. CIG Mainline was quoted up almost a nickel, and at the Cheyenne Hub prices were a couple of pennies higher.

Forecaster Wunderground.com predicted the high of 52 Thursday in Denver would fall to 39 by Friday.

Wednesday’s 10-cent futures gain was more difficult for analysts to figure out than Thursday’s 15-cent plunge. “The natural gas market staged a brisk move back to the upside on Wednesday that we found tough to figure,” said Tim Evans of Citi Futures Perspective in New York. Evans thought there might be “some storage ‘whisper number’ in circulation that we didn’t hear about, but the news wire survey expectations for 90-91 Bcf in net withdrawals from DOE [Department of Energy] storage for the week ended Feb. 24 seemed pretty tame compared with the 118 Bcf five-year average for the date, and about what we had figured on having seen from a few other estimates over the past few days. Our own model points to a somewhat lower 85 Bcf draw.”

Others were also looking for a decline in the 80-90 Bcf range. A Reuters survey of 24 analysts showed an average 90 Bcf with a range of 74-105 Bcf. Kyle Cooper of IAF Advisors in Houston was looking for a draw of 84 Bcf, and industry consultant Bentek Energy forecast a reduction of 90 Bcf. Last year 85 Bcf was withdrawn.

Once the 10:30 a.m. EST inventory figure was released showing a thin 82 Bcf pull, traders lost no time selling the market.

“We were looking for a 90-92 Bcf pull and we broke through [$2.50] support immediately after the number came out,” said a New York floor trader. “At any given point the $2.50 support is now resistance.”

For the week ended March 2, Evans forecasts a pull of 79 Bcf, higher than last year but lower than the five-year average. “Under this storage scenario, the year-on-five-year average storage surplus that was 744 Bcf as of Feb. 17 would continue to make new highs in the weeks ahead, reaching 832 Bcf on March 16 with no guarantee the trend would halt there,” he said in comments to clients.

Evans recommends holding a short position in April natural gas at $2.69 with a protective stop at $2.73. “We still plan to take profits at $2.38 if we get the chance.”

Followers of Market Profile see a likely successful trade set up. According to Tom Saal, vice president at INTL FC Stone of Miami, FL, the week’s initial balance stands at $2.51 to $2.74, and Market Profile methodology calculates 50% and 100% price objectives once they break out of the initial balance. “$2.395 is the 50% target, and it’s a high-probability trade. If you don’t hit it tomorrow [Friday], you hit it on Monday,” he said.

Longer term, Saal conceded that “we are still going horizontal for now, but I wouldn’t want it to get much lower than $2.39. You are building a distribution and the mode in the April contract is $2.644.” Periods of horizontal price movement are typically followed by periods of vertical movement. “Right now, the vertical movement is down, but usually the movement away from the mode is terrific. Right now I wouldn’t call what we have seen as terrific. Usually you get a rocket shot out of there,” said Saal.

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