A late December push of winter cold into the eastern half of the United States was all it took to energize bidweek buyers and draw the market out of a mild-weather morass. The NGI January National Bidweek Average posted a stout double-digit gain of 19 cents to $2.46, and although a few individual market points in the Northeast, West Texas and the Rockies failed to participate in the advance, all regions of the country were able to record gains.

Of the actively traded points those enjoying the largest moves were Algonquin Citygate adding $1.64 to $6.86, closely followed by Tennessee Zone 6 200 L rising $1.58 to $6.63. On the downside, Texas Eastern M2 Receipt gave up the most, dropping 27 cents to $1.28.

Regionally, the Northeast gained the most, adding 40 cents to average $2.78, and the Rockies brought up the rear with a gain of a nickel to $2.26.

Midcontinent bidweek quotes were up on average 8 cents to $2.23 and East Texas managed to improve 12 cents to $2.25. Both California and the Midwest were up 13 cents to $2.61 and $2.55, respectively, and both South Texas and South Louisiana were higher by 19 cents to $2.33 and $2.35, respectively.

While natural gas price bulls were happy with the 19-cent gain in the national average from December 2015 bidweek to January 2016 bidweek, the $2.46 average was still $1.09 below the one-year comparison from January 2015 bidweek.

January futures settled at $2.372, up 16.6 cents from the December contract settlement as the mild winter to-date began to give way to more seasonable temperatures.

The late December cold had pipelines recording high volumes and those volumes out of Northeast basins have changed the traditional flow from Gulf to East and Midwest markets. “We are in fire hose mode,” said an industry veteran familiar with numerous natural gas markets. “Every pipe is split. Any pipe in the Northeast is moving some gas to the Northeast market and the balance is moving south. Tennessee, Tetco and Transco are all doing that. Algonquin is fed by Tetco, but there is nothing going south on Algonquin.

“I guess if you were standing in the middle and the gas was tied around your arms you might get pulled a little bit. At some points there may be nodes where the flow is equally balanced in both directions,” he said.

Bidweek-wise, the veteran thought that the mild weather conditions present early in bidweek would not be likely to continue. “I think you have to start thinking more closer to normal weather conditions. A lot of deals get done on the basis of expectations of normal, and if it doesn’t happen you sell back gas you paid $2.20 for at a lesser price. I think a marketer would anticipate prices rising especially with the Nymex moving.

“I think you would have to assume the ridiculous warmth we were having is not going to continue. We had 86 degrees in Houston on Christmas day.”

As bidweek trading wound down on Thursday traders had to digest what was expected to be a highly uncertain Energy Information Administration (EIA) storage report. “This week’s survey forecast range was wildly wide; -39 to -78 Bcf,” said John Sodergreen, editor of Energy Metro Desk (EMD). He cited a low confidence level among the analysts surveyed, and “The range between the three categories we track is 5.5 Bcf, which according to our Tealeaves points to a possible surprise report out of EIA.” He added that the EMD survey resulted in an average 60 Bcf, but “We see a high-side bias to this week’s potential surprise report, so, EIA reporting a draw in the low-to-mid -60’s (or more) should be about right.”

The EIA reported a 58 Bcf withdrawal in its 10:30 a.m. EDT release for the week ending Dec. 25, and the pull on storage put inventories at 3,756 Bcf. February futures fell to a low of $2.307 following the release of the storage data, but by 10:45 a.m. February was trading at $2.317, up 10.3 cents from Wednesday’s settlement. February opened floor trading at $2.329.

Prior to the release of the data, analysts’ estimates were in the 50 Bcf to 60 Bcf withdrawal range. IAF Advisors was looking for a pull of 62 Bcf and a Reuters survey of 17 traders showed a range from -18 Bcf to -78 Bcf with an average -57 Bcf. ICAP Energy calculated a 66 Bcf withdrawal.

“We were trading at about $2.34 before the number came out, traded down to $2.307 and then moved back up. We didn’t make any new highs or lows off the number,” a New York floor trader told NGI. “Volume is about normal, but there are a lot of people not in today. You can get very choppy markets under those conditions,” he said.

Tim Evans of Citi Futures Perspective noted the 58 Bcf pull was “marginally above the 56-Bcf Bloomberg survey figure, a result we’d call more ‘constructive’ than bullish, indicating a somewhat tighter supply/demand balance but still bearish relative to the five-year average benchmark.”

Under the new five-region format inventories stand at 3,756 Bcf and are 532 Bcf greater than last year and 448 Bcf more than the five-year average. In the East Region 18 Bcf were pulled, and the Midwest Region saw inventories fall by 26 Bcf. Stocks in the Mountain Region were down by 3 Bcf and the Pacific region was lower by 8 Bcf. The South Central Region, closely similar to the former Producing Region, shed 3 Bcf.

Whether cash and futures markets can continue their march higher is an open question, but analysts note that market bears in 2016 will have strong headwinds to face in the form of moderating production and lower capital expenditures.

Jefferies LLC has reduced its 2015 exit rate for U.S. gas, but supplies are forecast to decline in 2016 as exploration and production (E&P) companies for the second year in a row sharply reduce capital expenditures (capex). “More limited evacuation solutions in the Northeast” also are expected, where the mighty Appalachian Basin has continued to push supply higher.

Using a 21-basin model for the U.S. onshore, the Jefferies team led by Jonathan Wolff reduced its bottoms’ up estimate for the 2015 exit rate by 1.5 Bcf/d to 70.8 Bcf/d.

Capex cuts for 2016 “will be dramatic,” Wolff said, and less money means less development. “Producers really cannot justify drilling anything at current natural gas price levels,” he said. “We believe E&P’s will have much more dramatic capex cuts than market expects, down perhaps 50%-plus from 2015, as gas producers wait for a price signal that is $2.75/MMBtu-plus.”

In physical market trading Thursday Mid-Atlantic prices posted stout gains as Monday on-peak power pricing provided an incentive to make incremental purchases for power generation. Intercontinental Exchange reported Monday power at the PJM West terminal rose $12.30 to $41.70/MWh and power at the New York ISO’s Zone A delivery point (western New York) added $11.69 to $36.69/MWh. On-peak Monday power at the New York ISO’s Zone G terminal (eastern New York) jumped $23.46 to $49.25/MWh.

In addition to perking up the screen and bidweek markets, colder temps are also boosting the day-ahead natural gas cash market. Gas on Tetco M-3 Delivery for flow last Friday through Monday rose 24 cents to $1.64, and gas bound for New York City on Transco Zone 6 gained 91 cents to $2.96. Packages on Dominion South were quoted 16 cents higher at $1.39.

In New England traders also had robust power pricing with which to work. Intercontinental Exchange reported on-peak Monday power at the ISO New England’s Massachusetts Hub surged $25.26 to $67.82/MWh.

Gas for Friday through Monday delivery to the Algonquin Citygate rose 56 cents to $5.21, and deliveries to Iroquois Waddington were quoted 36 cents higher at $2.82. Gas on Tennessee Zone 6 200 L was seen 22 cents lower at $5.12.

In the Midwest, Intercontinental Exchange reported on-peak Monday power at the Indiana Hub rose $3.68 to $30.60/MWh and natural gas prices took note.

Gas on Alliance rose 8 cents to $2.43, and deliveries to the Chicago Citygate were also seen 8 cents higher at $2.45. Gas on Michcon changed hands up 4 cents to $2.40, and parcels on Consumers gained 7 cents to $2.43.