Natural gas futures climbed modestly higher Wednesday, fueled by cautious optimism over expectations of a large storage draw set to be announced Thursday morning combined with an increasingly bullish technical outlook. The March contract closed at $6.376, up 6 cents for the session, but down more than a dime from its $6.48 high on the day.

All eyes will be focused on the Energy Information Administration’s 10:30 a.m. EST release of updated storage data, a report that is expected to feature a 200-230 Bcf storage withdrawal. The ICAP-Nymex storage option auction held Wednesday revealed an implied market forecast of a 213 Bcf withdrawal and the informal Reuters survey reports a 215 Bcf pull. If realized, a draw of that magnitude would likely fall just short of the year-ago analog of 224 Bcf. Last week the market was surprised by the largeness of a 230 Bcf withdrawal, though traders took the news in stride and futures prices were allowed to slip lower in trading Thursday.

At 2,270 Bcf as of Jan. 21, gas in storage is 151 Bcf greater than a year ago and 279 Bcf above the five-year average. And while that knowledge may be comforting to the shorts, not all observers are convinced of the bearish supply situation. “A [storage] report within our [216-226 Bcf] range would again be considered quite bullish from a temperature-adjusted basis,” wrote Citigroup analysts Kyle Cooper in a note to customers Wednesday. And while he admits that ending spring inventory levels near 1,200 Bcf are still projected, he notes that his bearishness has clearly been tempered by the recent withdrawals both on an absolute and temperature-adjusted basis.

But even if you believe that Punxsutawney Phil seeing his shadow Wednesday means six more weeks of winter, you have to acknowledge the reality that the days are only getting longer and warmer from here on out. “There has never been a [weekly storage] draw larger than 200 Bcf past the second week in February,” continued Cooper. “Maybe this year, but it looks doubtful,” he said noting that there are some forecasts that now call for another blast of cold air in the weeks to come.

However, according to the National Weather Service, above normal temperatures remain in the forecast for the Northeast and North Central portions of the country through at least the middle of the month. This large swath of mild air will be buffered by normal temperatures in both the Mid-Atlantic states and across the Rocky Mountains. Below-normal temperatures, meanwhile, are forecast only in the extreme southeastern corner of the country, the NWS eight- to 14-day forecast reported.

In daily technicals, Craig Coberly of GSC Energy in Atlanta suggests the market’s ability to close above Gann resistance at $6.30 is evidence the short-term trend has turned higher. Should the rally really materialize, Coberly sights some real upside objectives. “If gas closes above $6.84 before reaching the downside $5.90-99 objective, I’ll likely conclude the next leg higher has started with likely objectives of $7.20 or $7.85,” he wrote in a note to customers Wednesday.

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