After receiving a combination of supportive storage and weather news Monday morning, natural gas traders lifted the futures market off its early session lows and notched a 15-cent advance in just 45 minutes. The market moved sideways throughout the afternoon as technical selling associated with congestion in the $4.35 area from last week was enough to corral bulls. January closed at $4.32, up 12 cents for the session.

According to EIA’s announcement just before the holiday, working gas in storage was down 49 Bcf to 3,047 Bcf as of Nov. 22. Versus expectations calling for a net draw of 20-50 Bcf, the 49 Bcf withdrawal was on the supportive side of the market. A week earlier the EIA reported only a 1 Bcf withdrawal and two weeks ago a 48 Bcf withdrawal was seen. Last year 30 Bcf was added to underground storage facilities. Skewed by a whopping 148 Bcf withdrawal two years ago this week, the prior three-year average is calculated as a 44 Bcf withdrawal. However, those gains were cast in doubt.

Because many had already left their offices when the report was released at 4:30 p.m. EST last Wednesday evening, traders reacted Monday to the supportive storage news. Moreover, the size of last week’s report has traders looking for another big drawdown this week. “Not only was Wednesday afternoon’s report of 49 Bcf in net withdrawals for the week ended November 22 higher than expected, but the heating degree day accumulations for last week were above normal and far more than last year,” wrote Tim Evans in a note to customers Monday. Accordingly, Evans looks for another 40-50 Bcf withdrawal when the Energy Information Administration releases its weekly data Thursday morning.

But Evans’ estimate may be on the low side. Citing a hefty heating degree day tabulation for last week, Thomas Driscoll of Lehman Brothers in New York looks for a withdrawal of 80 Bcf. If realized, a draw of that magnitude will contrast sharply with a five-year average withdrawal of 17 Bcf, not to mention the 4 Bcf injection from a year ago. And that may just be the tip of the iceberg, he continued. “Colder than normal weather is expected to lead to very strong storage withdrawals over the next two weeks….[which] could result in a reported storage deficit of nearly 400 Bcf compared to a year ago,” he wrote Monday.

And while hefty storage draws are not something to take lightly, traders may have a bigger source of concern Tuesday morning. According to the latest eight- to 14-day forecast released by the National Weather Service after the close of trading Monday, above-normal temperatures are expected to canvas the map of the United States for the December 10-16 timeframe. A strip of normal temperatures is forecasted across Texas and the Southeastern corner of the country for that time period, but gone are the below-normal temperatures that have been charged with the current high price level.

In daily technicals, look for resistance at Monday’s high which coincides with the equilibrium trading level from last week, says Evans. Should prices move lower as expected, the first target will be the Nov. 15-18 chart gap down to $4.13. A breakdown from that point would put pressure on psychological support at $4.00.

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