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Mixed Pricing Hints at Impending Softness

Prices continued to rise at a majority of points Thursday, bolstered by cold weather due to stick around into the beginning of the weekend in many areas and prior-day screen strength. But there were several signs that the late-week show of bullishness would be coming to an end Friday.

Gains ranged from a little less than a nickel to a little more than 30 cents. Gulf Coast points tended to display most of the largest advances.

However, not only were Thursday's increases considerably smaller than the preceding day's across the board gains, but a sizeable number of points were flat to down about 20 cents. The greatest weakness occurred in the Rockies/Pacific Northwest market.

Other reasons to anticipate falling prices Friday were forecasts of warming trends starting by the end of the weekend in the currently frigid regions and the fact that cash quotes were heading downward in late trading Thursday.

But meanwhile, somewhat wintry conditions remained on tap for Friday in most of the U.S. and Canada outside the desert Southwest. Even Florida would be losing its warmth as a cold front enters the state, according to The Weather Channel. Snowy weather is predicted for portions of the Northeast and Midwest and in much of the Pacific Northwest.

However, the lower Rockies will be starting its warm-up period ahead of some other regions. Denver, where a sub-freezing low remained in effect Thursday, will see its high rising into the upper 50s Friday.

The Energy Information Administration provided a small ray of hope for market bulls in reporting a 9 Bcf storage withdrawal for the week ending Oct. 27 -- the first pull of the nascent heating season. The withdrawal was expected and the volume was pretty much in line with consensus prior estimates, but Nymex traders went ahead and pushed December futures about a dime higher even though many analysts believed that a moderate withdrawal had already been factored into the market.

Cash prices were getting softer near the end of trading Thursday, which usually indicates the next day's direction, a Texas-based marketer said. After rebounding nearly 40 cents from its intraday low, the screen was continuing a little higher in Access activity that afternoon, he said. However, he didn't think that modest show of support would be enough to prevent cash weakness Friday with warmer weather on the way. Chicago's high is due to be in the 70s by the end of the weekend, he noted.

An Upper Midwest marketer said her area was seeing little snow flurries Thursday. Those were nothing serious, she said, but they were accompanied by 24-degree wind chills.

Commenting on the storage report, she said the industry is already in withdrawal mode, which wasn't surprising considering the cold weather of last week and this week. But we can expect to see injections resume in the report two weeks from now because next week will be above normal in nearly all of the U.S., she added.

Despite a small loss of about C4 cents, NOVA Inventory Transfer numbers were staying fairly strong in the opinion of a Calgary-based producer, who said the intra-Alberta market was only about US78 cents back of Nymex Thursday. He noted that freezing weather in the province is keeping more gas at home in Alberta than usual. The Calgary area will see a warm-up this weekend along with most of the North American market, with highs reaching around 60 Sunday, he said. But the break from the cold will be short-lived, he said, because the high is predicted to plunge back into the teens Monday.

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