March natural gas futures rose in light trading Wednesday as traders positioned themselves prior to the release of government storage data Thursday, which is likely to show the second highest withdrawal of the season and be well above last year and five-year averages. At the close March added 8.2 cents to $4.429 and April gained 7.9 cents to $4.445. March crude oil rose 9 cents to $90.86/bbl.

“It’s been a pretty quiet day. Traders may be awaiting the inventory report Thursday to reload on the short side,” said a New York floor trader. The inclement weather had thinned the trading ranks and activity was described as light.

“I think there are a number of people willing to sell a ‘pop’ if the market should trade higher off the weather or tomorrow’s [Thursday’s] withdrawal report. We are hearing a withdrawal number in the 200 Bcf range, but if the number comes in higher and it trades up to $4.50, there will be traders ready to sell. Have your orders in and be ready to strike,” he said.

The trader estimated market support at $4.25. “There is lots of winter left, so I think there are lots of people looking to pick it up [buy] in that $4.25 to $4.30 area,” he added.

Thursday the government may report the second highest withdrawal of the heating season, surpassed only by the 243 Bcf pull reported for the week ended Jan. 14. For the week ended Jan. 28 expectations for the 10:30 a.m. EST release by the Energy Information Administration are centered around a withdrawal in the high 180 Bcf area.

Industry consultant Bentek Energy, utilizing its North American flow model, expects a decline of 187 Bcf; Kyle Cooper of IAF Advisors in Houston anticipates a withdrawal of 188 Bcf; and Tim Evans of Citi Futures Perspective sees a draw of 202 Bcf. It’s likely that the slim surplus relative to last year and the five-year average will be shaved further if not eliminated. Last year inventories stood at 2,533 Bcf and the five-year average is 2,513 Bcf. Current inventory is 2,542 Bcf. Last year 111 Bcf was taken out and the five-year average pull at this time of year is 165 Bcf.

Further stout draws are likely in next week’s report as reported Wednesday morning that the blizzard pounding the Midwest, now dubbed “The Groundhog Blizzard,” continues to unleash its fury across Chicago and other cities across the Great Lakes; however, an end to the fierce snowstorm is finally in sight. A total of 17.1 inches of snow has buried Chicago’s O’Hare International Airport (the city’s official weather observation site) through 6 a.m. EST. Additional snow Wednesday will likely push the total past the 20-inch mark, putting the blizzard among the city’s top-four snowstorms. The storm from late January 1967 sits atop that list with 23 inches, the forecaster said.

Weather forecasters changed their 11- to 15-day outlook Tuesday and have revised it once again to show more above-normal readings in the Southwest. WSI Corp. of Andover, MA, in its Wednesday morning report showed below-normal temperatures from North Carolina south to Florida and in the Pacific Northwest. The southwest quadrant of the country is predicted to be above normal. “Colder-than-normal temperatures are forecast over the northwestern and southeastern U.S. Near- and above-normal anomalies are expected to encompass most of the rest of the country, with the warmest readings still anticipated in the Southwest.

“Temperatures may trend colder over the western and north-central U.S. and warmer over most locations south and east of Chicago than currently forecast. Medium-range models all advertise a more La Nina-like pattern will re-emerge over North America in mid-February.”

Analysts are of the opinion that last week’s selling is not likely to continue and are looking at the market from the buy side. “The preceding rounds have made it plain that we should expect to see decent withdrawals from underground storage. We are not going to see levels as severe as the last two withdrawals, we do not expect, but we could see decent triple-digit pulls from underground storage facilities,” said Peter Beutel, president of Cameron Hanover. “The recent decline in prices seems to have gotten most of the selling out of the way over the immediate term. We would be looking at this from the long side, from here, now.”

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