The energy industry breathed a sigh of relief Thursday morning as the Energy Information Administration reported that 123 Bcf was pulled from underground natural gas storage for the week ended Dec. 17. While higher than most expectations, the draw remained within the industry’s projection range — unlike the erroneous pre-Thanksgiving report that threw the market into chaos.

The report got the better of the five-year-average withdrawal by 1 Bcf and far outpaced most industry estimates. ICAP’s storage options auction on Wednesday revealed an implied market forecast of a 114 Bcf withdrawal, 1 Bcf short of the projection put out by the Reuters industry survey. However, the 123 Bcf withdrawal was well below last year’s 151 Bcf pull.

Immediately following the report, January natural gas futures dipped slightly before rebounding a little. However, the prompt month from there began trekking lower, touching but not breaking through the $6.63 support level. For the shortened session, January natural gas went on to settle at $6.668, down 15.2 cents from Wednesday’s settle and 78.9 cents lower than the previous Friday’s close.

“The market really reacted as it should have, since the number was a little more than was expected, but not out of the range of projections,” said Steve Blair of Rafferty Technical Research in New York. “I think the market has finally recognized that although there is some cold weather, the overall storage picture is that we have a hell of an overhang. Overall, we still have an awful lot of gas in the ground.”

Blair noted that things were very quiet on the screen. “It’s the day before the holiday. I would venture to say that a lot of local traders aren’t even down there. Buying is definitely thin.”

Prior to Thursday’s settle, Blair said he was eyeing support at $6.63 and then $6.50. “A break of those and we could see a nice little move to the downside,” he added.

Looking ahead to the next storage report, Blair said he believes that the cold weather experienced last week should provide for a pretty good withdrawal in this week’s report as well.

Working gas in storage now stands at 3,027 Bcf, according to EIA estimates. The withdrawal reduced the surplus to the five-year-average by 1 Bcf to 393 Bcf, but increased the surplus over year-ago stocks by 28 Bcf to 328 Bcf.

The East Region pulled 81 Bcf from underground storage for the week, while the Producing and the West regions removed 38 Bcf and 4 Bcf, respectively.

Commercial Brokerage Corp.’s Ed Kennedy said the storage report was mostly inline with expectations and wasn’t responsible for the down day Thursday. “The only thing that caused the weakness Thursday was that we had some fund-selling here in what ostensibly was a thin market,” he added.

Noting that this market is now controlled by the weather alone, Kennedy said it should be interesting to see what happens this week. “The independent forecasters are still calling for below normal temperatures for the first week of January while the National Weather Service is looking for above normal readings,” he said. “After the last three years, I don’t put too much faith in any long-range report from the National Weather Service anymore. It will be a short-range NWS forecast when we come in on Monday, so we will see what happens.”

Kennedy said he expects the next level of support to be at the $6.54 level. “I’ll bet you dollars to little green apples we find good support down there,” he added.

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