This week’s price trend, which began with mostly moderate firmness Monday and shifted Tuesday to a mix on either side of flat, continued to the downside Wednesday. With mild weather across the southern tier of states and no more than normal cold conditions elsewhere in the U.S. and Canada, all points were united Wednesday in losses that ranged from just under a nickel to more than 30 cents.

As on Tuesday, falling numbers in Wednesday’s late trading indicated that further declines are likely Thursday. This market signal was reinforced by a screen drop of nearly 15 cents, as opposed to a meager half-cent loss the day before. A marketer reported Transwestern-Permian prices about 15 cents lower in a late deal after initially trading around $5.00.

Despite generally benign weather fundamentals, winter storm warnings for the southern Appalachians are likely to bring snow Thursday into parts of the South, according to The Weather Channel. In contrast, “most of the Northeast should experience a fairly decent mid-winter day,” it added. TWC’s forecast of a pronounced chill with highs in the teens in the Upper Midwest and eastern Plains Thursday failed to boost Midwest citygates, although several Midcontinent points recorded some of Wednesday’s smallest losses.

“To say the least, it’s a very quiet market,” said a Midcontinent/Midwest trader. He reported hearing “a lot of conflicting ideas” on whether market will go up or down from here. Personally, he sees a substantial breakout to the downside within a month, expecting April futures to get down to the $4.50 area at some point. Tuesday’s spike in the crude oil futures market illustrates a relative disconnect between the crude and spot gas markets, he said.

A new System Overrun Limitation by Northern Natural Gas (see Transportation Notes) is about the only transportation issue in effect right now, the trader continued. Basis between the production and market areas is pretty close to an exact match of transport variable costs, he said. “Marketers like us used to have the opportunity to turn transport on or off” depending on the relevant economics, but there’s no real advantage to that currently.

A source who said he was “near the top end” of guesses that EIA will report a storage withdrawal of 180-200 Bcf Thursday expects the report to have little or no impact on prices. Storage data seems to be well incorporated into the market in advance of actual reports lately, he said.

Upper Midwest temperatures are staying a little below freezing, a marketer said, but regional gas load seems deceptively light, which suggested to her that utilities are dipping into their storage accounts more late in the withdrawal season. “We’ve got little to do in this quiet market other than wait out the end of winter,” she added.

“The weather feels like April in a lot of places,” said a Southwest trader who reported near-parity numbers in the low $5.00s for both Waha and the Southern California border.

Weather 2000 is sticking with its prediction of February coming in colder than normal in the eastern half of the U.S. The “only quirks are how cold the waves will be, when the random mild days might pop up, and how many states will continue below normal net temperature results,” the consulting firm said in Wednesday’s advisory. “Some extremely powerful arctic/polar air plunges will occur over the next 10 days…and those lulled by meager NWS [National Weather Service] outlooks will be caught off guard. We’re talking Boston possibly plummeting below 0° F and only reaching the single digits in the afternoon(!); we’re talking ‘milder’ Chicago possibly plummeting into the single digits and barely cracking 20° F in the afternoon; we’re talking New York City possibly not getting out of the teens during the day (!); we’re talking snowless Cincinnati possibly not getting out of the 20’s during the day(!).” Winter still has a whole lot of bite left, concluded Weather 2000 in contradiction of some traders who believe that the heating season is practically finished as far as gas prices go.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.