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Cold, Futures Drive Price Gains at All Points

Prices rose across the board Wednesday in response to spreading cold weather and added support from a 25.3-cent futures gain the day before.

Nearly all gains were in double digits in ranging from a little less than a dime to nearly 95 cents. Unlike on Tuesday, there were no western backsliders this time as lows expected to be in the 20s or less Thursday sharply boosted demand in the Rockies, Pacific Northwest and Western Canada.

Sumas led the price charge higher as frigid weather caused buyers in Western Canada and the Pacific Northwest to bid against each other for supplies. Westcoast has been using its imbalance tolerance range to encourage packing of the system since last weekend.

Wednesday's increases left all points trading above their first-of-month indexes except Northeast citygates and Northern Natural-Ventura.

The South is staying fairly mild compared to the rest of the U.S. An approaching cold front will eventually cool things down a little, but warmer air ahead of the front will keep conditions relatively spring-like into the weekend, The Weather Channel (TWC) said.

Meanwhile, except for the Southwest, the rest of North America is having no trouble discerning that it's near the middle of winter. High temperatures struggling to get above the 30s and 40s, along with occasional snowfalls, will dominate the weather picture in the upper West, Midwest and Northeast for the next couple of days. And areas near the Canadian border in the northern Rockies and northern Plains will be hovering around either side of zero, according to TWC. However, at least the Midwest and Northeast are expected to see some moderation early next week before another blast of cold arrives.

One source speculated that recent weather-driven price increases might have been larger if not for greater use of still-bulging storage inventories.

No quotes were received Wednesday for Florida Gas Zone 1, which almost certainly was a result of Florida Gas Transmission announcing that it will not be accepting any nominations upstream of Galveston Bay in southeast Texas for Thursday or Friday (see Transportation Notes).

A Texas-based trader said the producers his company represents in the spot market had temporarily lost some production due to power outages in Kansas caused by heavy snow. The outages knocked a couple of gathering system compressors off-line, he said. He balked at making a call on Thursday's price direction, saying he had expected the cash market to be soft this week based on the previous week's forecasts.

Not everyone will get a Martin Luther King Day holiday next Monday, the trader said, but cash deals done on Friday will cover flows through Tuesday due to Nymex suspending regular open-outcry session trading on Monday.

A Midwestern marketer said her company didn't buy any new gas for Thursday after having stocked up a few days earlier, and it was glad to have avoided the rising prices of Monday through Wednesday. It may be able to stay out of the spot market for a good while longer, she said, because the forecast calls for warmer weather after another burst of cold ends late next week.

Reuters found an average expectation of a 46 Bcf storage pull for the week ending Jan. 5 in its survey of 22 industry players. Estimates ranged from 30 Bcf to 62 Bcf, the news service said. Analyst Tim Evans of Citigroup had a similar outlook in predicting a 45 Bcf withdrawal.

Jim Osten of Global Insight came in a bit lower in expecting a 42 Bcf pull to be announced. Looking further out, Osten said he looks for the drawdown to rise to 60 Bcf in the week ending Jan. 12.

The National Weather Service (NWS) has a relatively bullish forecast for the Jan. 15-19 period. It calls for below-normal temperatures throughout nearly all of the West, Midcontinent, Midwest and South. The exception areas, where normal conditions are expected, are in the East Coast states of the South; Ohio and the southern two-thirds of Indiana in the Midwest; and a swath along the Canadian border ranging from western Montana to northeast Minnesota. New England, along with eastern New York and Pennsylvania and northern New Jersey, comprise the only region where NWS expects above-normal readings.

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