Indicating that Tuesday’s rebounds were something of a market aberration, prices reverted to falling at nearly all points Wednesday. The screen’s prior-day slide of 59.9 cents, the continued mildness of early January temperatures in most areas, and expectations of an unusually small storage withdrawal report were the primary influences in the renewed softening.

Small upticks in Texas Eastern’s two Texas zones, where transport has been constrained for some time, and a flat Louisiana point were the exceptions to losses that ranged from a nickel to about 75 cents.

Wednesday’s downtrend occurred despite predictions of snow and freezing temperatures Thursday in the northern reaches of the Northeast and Midwest. The South is expected to get cooler but still have highs at seasonal to above seasonal norms. Much of the West is starting to get a break from the storms that have plagued the region recently, but only upper elevations of the Rockies are likely to see highs that are below freezing, according to The Weather Channel.

Prompt-month futures made a stab at going below $10 for the first time since late August 2005, but didn’t quite make it (see futures story). Still, the screen’s plunge of another 42.9 cents Wednesday, marking a two-day loss of slightly more than a dollar, made the softness of cash numbers highly likely to continue, sources said.

Although no OFOs were issued, excess supply was an issue in western markets. Kern River reported that banking of gas on its system had become a significant problem over the long weekend and that it would act to ensure that actual receipts and deliveries matched up with nominated volumes (see Transportation Notes). And Westcoast continued to encourage drafting of its system by keeping its tolerance for positive imbalances at zero.

However, there was a modestly bullish sign in the Gulf Coast. Florida Gas Transmission said cold weather was in the forecast for its Florida market area on Friday and Saturday morning, and thus customers should be alert for the potential issuance of an Overage Alert Day notice on an upcoming gas day.

“It’s still pretty mild for us,” said a Northeast utility buyer. Being “pretty well termed up” on supply and with considerably less than normal throughput for early January, his company hasn’t been buying any new gas recently, he said. Actually, it is cutting back volumes on some contracts that allow it, he added.

If the weather keeps staying unusually moderate for most of January, the buyer continued, his company will have to reduce baseload takes and start ratcheting up storage withdrawals in February because it has taken only relatively small amounts out of its accounts so far. He had no doubt that others were in similar situations, saying pretty much all storage operators require at least some degree of account cycling each year, although not necessarily 100%. He sees extended price softness with moderate temperatures forecast through at least mid-January.

A Houston-based marketer doesn’t expect any big run-ups in the market for a while, but said he can see a chance for a modest rally at one point in the next week or two. He said a Chicago-area utility told him it was still nearly full on storage and didn’t need any new supplies gas for now. He also noted that Nicor was still allocating its system deliveries by various pipes (see Daily GPI, Jan. 3). He agreed with others that it looks like EIA will report a bearish storage number Thursday, but said that’s been factored into the market since last week because everyone knew temperatures were above seasonal norms.

Citigroup’s Kyle Cooper drastically reduced his estimate of the storage pull for the week ending Dec. 30 from the mid 50s Bcf to 12-22 Bcf. However, his new projection was easily the most bearish. Reuters news service said its survey of 17 industry players found an average expectation of a 59 Bcf withdrawal. The estimates ranged from 12 Bcf to 100 Bcf, Reuters said, thus making it likely it included Cooper’s numbers in the survey.

Believe it or not, the National Weather Service (NWS) has no below normal temperatures for the Lower 48 states in its forecast for the Jan. 9-13 workweek. In fact, the only areas where the agency doesn’t predict above normal readings are in Florida along with the southern ends of South Carolina, Georgia and Alabama, and in the coastal-side three-fourths of California. NWS looks for above normal temperatures everywhere else in the U.S., with an especially mild section in the Upper Plains and western half of the Midwest.

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