Physical gas prices rose on average a dime Tuesday as the Midwest and Midcontinent were bracing for the first major storm of the season. Rockies, Great Lakes and Midcontinent points all bounded higher. January futures rose 6 cents to $3.418, and February added 5.7 cents to $3.455. January crude oil gained 73 cents to $87.93/bbl.

Next-day gas prices across the Midwest advanced as forecasters reported that a major storm was expected to rip through the area, causing wind damage, power outages and disrupted travel. According to AccuWeather.com, “Cities in the path of one or more aspects of the storm include Kansas City, Omaha, St. Louis, Des Moines, Chicago, Milwaukee, Indianapolis, Louisville, Detroit, Cincinnati and Cleveland. Blizzard conditions are possible with damaging winds, blowing snow and whiteout conditions across eastern Colorado and western portions of Kansas and Nebraska on Wednesday. Northeastern Kansas to Iowa may be dealing with blizzard conditions Wednesday night before the harshest conditions spread from Iowa to Wisconsin on Thursday.

“The high winds will accompany a dramatic change to cold weather. While this change will be brief over part of the central Plains and Tennessee Valley, it can bring a rapid freeze-up to part of the Upper Midwest and a major lake-effect snow event,” said AccuWeather.com meteorologist Alex Sosnowski.

Midwest marketers, nonetheless, were not sure if the cold weather would be sufficient to make a dent in the December surplus gas. “It’s been so warm, and we are just moving gas around,” said a Michigan marketer. “To some degree, the cold weather will allow us to find a home for all the gas we are moving around, but they keep changing the weather reports, and what may be cold may not be cold by the time the next weather report comes through.

“Some of our baseload December gas may find its way into storage. This is an unusual December, and our customers are pretty much matching their November usage, and that is not typical. When we were deciding how much baseload gas to buy, we were looking at the weather reports and they were saying colder temperatures. It’s almost that after you buy the gas, the weather changes,” the marketer said.

Colder temperatures are definitely in the mix, but not the sub-zero, bone-rattling conditions often expected with a storm of this magnitude. AccuWeather.com forecasts that Tuesday’s high in Chicago of 42 will dip to 27 by Saturday and by next Tuesday make it back up to 37. The normal high in Chicago at this time of year is 35. For New York City the high Tuesday of 53 is anticipated to fall to 41 by Saturday and reach 42 by next Tuesday. The normal high in New York at this time of year is 42.

Quotes for Wednesday gas at the Chicago Citygate were 7 cents higher at $3.40, and deliveries on Michcon added 7 cents to $3.48. On Consumers, next-day deliveries came in at $3.49, 3 cents higher, and Wednesday customers on Alliance had to pay 8 cents more at $3.45. Gas at Dawn jumped about 6 cents to $3.71.

Points in the Midcontinent and Rockies for the most part enjoyed double-digit gains. Next-day gas on Northern Natural Ventura jumped about 11 cents to $3.37, and deliveries on ANR SW added 11 cents, also to $3.26. Gas at the NGPL Midcontinent Pool rose a dime to $3.24; Oklahoma Gas Transmission was quoted at $3.24, higher by a dime as well, and parcels on Panhandle Eastern jumped by 13 cents to $3.21.

On CIG Mainline, next-day gas surged 13 cents to $3.28, and at the Cheyenne Hub Wednesday deliveries rose a stout 16 cents to $3.34. At Opal gas prices for Wednesday rose 16 cents to $3.38, and on Northwest Pipeline Wyoming quotes rose by 12 cents to $3.32.

Futures traders look for the market to continue higher. “The [earlier] support we saw at $3.50 should give way, and I look for the market to test $3.51 to $3.53,” said a New York floor trader. “The bottom is in the market for now, and we are just trading a range. When it broke through the $3.50 area earlier, it found support down around $3.29, I believe, and I think holders of length are trying to give the market a boost to test the $3.51-3.53 area.”

Following the Midwest “blizzard” weather forecasts are slightly cooler. WSI Corp. of Andover, MA, in its six- to 10-day outlook shows a wedge of below-normal temperatures striking the northern plains as far south as Iowa. The remainder of the country is expected to be normal. “Today’s forecast is cooler across portions of the Deep South than [Monday’s] outlook. Some locales on the West Coast are also slightly cooler, [and] most of the country at times through the period may run colder than currently indicated in a strong higher-latitude blocking pattern,” the forecaster said.

Tom Saal, vice president of INTL Hencorp Futures in Miami, in his work with Market Profile was expecting January futures to test Monday’s value area at $3.375 to $3.343 before moving on and testing the weekly value area at $3.540 to $3.668. Typically value areas are filled the next day.

Technicians versed in Elliott Wave and Retracement see Monday’s gains, the first in eight trading sessions, as a “constructive day for the bulls,” according to Brian LaRose at United ICAP. He cautions that “two ingredients are needed in the recipe for bottoming action: a turn higher from key support and a break above key resistance. While natgas turned higher from the 3.267 vicinity, resistance has yet to be tested. To even suggest a bottom is in place, $3.505-3.561 will need to be breached.”

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