Coming in some 15 Bcf below a number of industry surveys, Thursday’s news that only 116 Bcf was removed from the nation’s natural gas storage caverns for the week ending Feb. 26 had futures prices retreating to a three-month low. April natural gas dropped 18.2 cents from Wednesday’s close to finish Thursday’s regular session at $4.575.

After trading at $4.741 in the minute before the 10:30 a.m. EST release of the report, April natural gas futures dropped more than a dime in the minutes that immediately followed. A few minutes after 11 a.m. EST the prompt-month contract had made a new low for the larger down move at $4.556. The last time a prompt-month contract traded lower was exactly three months ago on Dec. 4, 2009, when the January 2010 contract reached a low of $4.445.

“With just a few weeks left of core heating demand, it is now clear that working gas in storage will likely slip below the five-year average,” said Teri Viswanath, an analyst with Credit Suisse Research and Analytics. “The market has seemingly become comfortable that sufficient supplies exist to repair the storage deficit and satisfy noncore demand requirements during the upcoming injection season. We are beginning to suspect that heavier utility buying this summer to fill the hole in storage will likely set a floor for natural gas.”

Citi Futures Perspective analyst Tim Evans had been expecting a 150 Bcf pull, and a Reuters survey showed consensus expectations for 131 Bcf in net withdrawals, with estimates ranging from 117 Bcf up to 155 Bcf. Bentek Energy was a little more on target with its 118 Bcf draw estimate.

According to the Energy Information Administration, working gas in storage stood at 1,737 Bcf as of Feb. 26. Stocks are 71 Bcf less than last year at this time but still 21 Bcf above the five-year average of 1,716 Bcf. The East region led the charge for the week by withdrawing 74 Bcf, while the Producing and West regions removed 27 Bcf and 15 Bcf, respectively.

Market analysts see the need to replenish inventories as a supportive market force in the coming months. “I think we will average between $5 and $6 for the year. We could spend some time below $5 and we could spend some above $6, but I don’t see the whole summer below $5,” said a Chicago banker. He said he thought the market was near its low, and although it could trade as low as $4.50 to $4.25, “I don’t see it sub-$4.”

By eliminating the year-on-year and year-on-five-year average storage surpluses, the banker said support will likely be a lot easier to defend. “We are coming out of winter with just a little less gas than last year so we will need to put a little more away than we did last year and that will keep a little bit of a floor under the market. Last summer was remarkably mild, and you have to believe we will see a little heat this year. If temperatures are benign, prices will tank just like they did the fall of last year, but I don’t think you can expect that to happen.”

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