Natural gas futures traders went through a range of emotions Thursday morning after the Energy Information Administration (EIA) reported that 111 Bcf was withdrawn from underground natural gas storage inventories for the week ending March 5. The number, which was just above most industry expectations, set off a mini-price rollercoaster that ultimately resulted in new lows for the down move.

Heading into the 10:30 a.m. EST report, the April contract was trading at $4.517. Immediately after the release futures knee-jerked to a high of $4.556 before resolving lower. The prompt-month contract recorded a new low of $4.415 just before 12:20 p.m. EST before inching higher to close the day at $4.440, down 11.9 cents from Wednesday’s regular session finish.

“The 111 Bcf net withdrawal was a bit above the consensus forecast and slightly over the 107 Bcf five-year average, which could be seen as mildly supportive,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “However, it probably changes very little in terms of the overall storage picture. We’re still looking at a ‘near average’ storage withdrawal that leaves the total at a ‘near average’ level for this time of year. That’s not the kind of result that will convert bears to bulls.”

Heading into the report, Evans had been expecting a 96 Bcf draw, while Bentek Energy was expecting a 115 Bcf pull and the Reuters survey was anticipating a 109 Bcf pull.

“It looks like the entire world was secretly expecting a larger storage withdrawal. I think that was really the impetus for the sell-off Thursday,” said Julio Sera, a broker with Hencorp Futures LC in Miami. “The market has been pulling back over the last couple of weeks, which has created a pretty interesting downtrend. Even though the storage report was just slightly below expectations, the key is it was still below expectations. That’s what traders care about.”

Going forward, Sera told NGI he sees some more room to the downside for prices. “We’ve already broken below the $4.600 long-term support area and it doesn’t look like we’re ready to stop here,” he said. “Looking at the weekly breakdown targets utilizing Market Profile, the first important price below us comes in at $4.393. Below that is $4.321. Looking a little further out, we still believe prices could converge back to the cost of production, so there very well could be a $3 handle in front of this price by the time the withdrawal season is done.”

According to the EIA, working gas in storage stood at 1,626 Bcf as of March 5. Stocks are 71 Bcf less than last year at this time, but still 19 Bcf above the five-year average of 1,607 Bcf. For the week, the East Region removed 72 Bcf while the Producing and West regions drained 32 Bcf and 7 Bcf, respectively.

Going into the report, some analysts were not expecting to see much market impact. “Even a bullish surprise within [Thursday] morning’s storage report will likely have limited influence as this market still appears fixated on relatively mild temperature forecasts that extend into the early spring period,” Jim Ritterbusch of Ritterbusch and Associates said Thursday morning. He sees the market having factored in a season-ending inventory “comfortably above average at around the end of this month” and a bearish technical picture dominating the trading landscape at least as far as large speculators are concerned.

Forecaster WSI Corp. of Andover, MA, in its six- to 10-day outlook Thursday predicts warmer-than-normal temperatures over the northern tier of the eastern U.S. and colder-than-normal readings along the Gulf Coast. “Anomalies are generally expected to average between four to eight degrees above or below normal, respectively.” WSI cautioned that temperatures may trend colder over the western half of the country than currently forecast “as all models feature a deepening trough in the West late in the period. The Eastern Seaboard may trend warmer than currently forecast.”

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