Beset on all sides by negative influences — weather, futures and storage — it was little wonder that prices continued to fall at most points Tuesday. Thanks to the popularity of year-end vacations between Christmas and New Year’s Day, trading activity was light.

About the only positive thing cash quotes had going for them was the return of industrial-commercial load from a long weekend, and even that was muted because vacations during the holiday period are popular in other industries too.

A few points that were flat to about 20 cents higher averted across the board softness. Otherwise, Tuesday’s losses ranged from a nickel to about 45 cents, with western points taking most of the biggest hits. That was especially so in the Rockies, where last week’s blizzard conditions had been replaced by seasonal temperatures.

Prospects for a cash rally anytime soon are slim to none as the outlook for unusually moderate weather in most of the U.S. extends through at least next week (see below). And futures traders put a further burden on any potential rally in the physical market by sending the January contract more than half a dollar lower Tuesday (see futures story). The rest of Nymex’s energy complex also saw large declines.

With nearly two months gone in the traditional storage withdrawal season and inventory still at very high levels, many capacity holders are being pressed by mandatory withdrawal ratchets that will put extra downward pressure on cash prices during the next three months, one source observed.

Dominion provided a view of the surplus storage situation in reporting Tuesday that as of Dec. 21 the working gas volume in its storage facilities stood at 254 Bcf. In the comparable weeks of the last two years, inventory was 225 Bcf on Dec. 22, 2005 and 241 Bcf on Dec. 23, 2004, Dominion said.

No price relief is in sight from weather. Seasonal temperature norms will prevail Wednesday in the South, Northeast and West, according to The Weather Channel, while the Midwest will be “well above” its usual averages.

It was a “pretty dead” day in the market with a lot of people still out on holiday, a Northwest utility buyer said. She said her company had already finished with January business ahead of bidweek, but Tuesday she was seeing Sumas basis numbers at plus 10-20 cents, while Northwest domestic was running much weaker at basis of minus $2.00 or so. That was in line with the Sumas lead of $2-plus in the daily spot market for most of December, she observed.

It’s not so much the Kemmerer (WY) Compressor Station bottleneck for northbound capacity on Northwest that causes the big Sumas premium, the buyer said. As she sees it, few people have Station 2 capacity on Westcoast, so anybody who buys at Sumas is required to pay much more than the price for domestic gas. It’s costing 133% of the firm rate to move gas from Station 2 to Sumas using Westcoast IT, she said. It’s not a very big deal, though, she said, because “not that much gas” is going through Sumas anyway.

As anticipated, the weather outlook for gas prices remains bearish into at least the first week of January. The National Weather Service forecast for the Jan. 1-5 period calls for normal temperatures south of a line running westward through central South Carolina and along the southern edge of Tennessee into central Arkansas, the southern border of Oklahoma and the Texas Panhandle. Most of New Mexico is also included in the “normal” projection. Otherwise, the rest of the U.S. will experience above normal temperatures, NWS said.

The number of drilling rigs seeking gas in the U.S. in the week ending Dec. 22 was up five from the previous week to 1,438, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). The number was 3% higher than a month ago and up 17% from the year-earlier level, Baker Hughes said.

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