Stock market devotees often refer to the "January effect" where if the market can advance during January, it is likely to post gains for the entire year. There are still several weeks left in January, but if there is a "January effect" for natural gas prices, it will have to pull prices out of an initial hole. The NGI Weekly Spot Gas Average fell 8 cents to $3.55 on warmer than normal temperatures in a number of areas around the country, and gains in the Northeast and Southeast were able to partially offset broader losses of 20 cents or more at most market points.

The individual point showing the week's greatest gain was Algonquin Citygate with a rise of $1.66 to average $7.19 and the greatest loss was seen at Dawn, which posted a loss of 84 cents to $3.63. Regionally only the Northeast and Southeast rose with the Northeast adding 90 cents to $5.49 and the Southeast up by 15 cents to $3.75.

The Midwest was off by 31 cents to $3.40, South Louisiana dropped 28 cents to $3.27, and East Texas shed 27 cents to $3.23.

Weekly gas at South Texas points was down by 26 cents to $3.23, gas at California locations fell 25 cents to $3.42, and the Rocky Mountains gave up 24 cents to $3.28. The Midcontinent fell 13 cents to $3.34 and Appalachia dropped 10 cents to $3.17.

February natural gas futures also suffered losses on the week, which featured a much smaller than expected Energy Information Administration (EIA) storage withdrawal report. The front-month contract tumbled 43.9 cents to $3.285 during the week.

The EIA weekly storage report on Thursday for the week ending Dec. 30 offered what at first seemed to be a big bearish surprise with a withdrawal of 49 Bcf, about 30 Bcf less than market expectations and outside the range of analyst forecasts. The withdrawal was also a far cry from both the 98 Bcf that was taken out the same week a year ago and the five-year average pull of 107 Bcf.

At the close on Thursday, however, February had managed to climb into positive territory by six-tenths of a cent to $3.273 and March had risen 1.9 cents to $3.268.

Initially, futures tumbled once the figures were released. The February contract reached a low of $3.172, and by 10:45 a.m. February was trading at $3.199, down 6.8 cents from Wednesday's settlement.

"The number sent the market aggressively lower, but it's attempting to recover those initial losses," said a New York floor trader shortly after the data hit trading screens.

"It was a real shocker to the market," said Steve Blair, vice president at Rafferty Technical Research in New York. "I was surprised the market bounced back a little bit."

Tim Evans at Citi Futures Perspective said he "think[s] reduced demand over the holidays played a key role in the small decline for last week and anticipate[s] a significant rebound in the rate going forward. We'll see how quickly the market may pivot from the bearish data for last week to the prospect of stronger numbers going forward."

Inventories now stand at 3,311 Bcf and are 364 Bcf less than last year and 21 Bcf less than the five-year average. In the East Region 20 Bcf was withdrawn and the Midwest Region saw inventories decrease by 25 Bcf. Stocks in the Mountain Region fell 10 Bcf, and the Pacific Region was down 8 Bcf. The South Central Region added 14 Bcf.

Seasoned traders see an opportunity. "I'm a buyer. I think they overdid it," said Alan Harry, director of trading at McNamara Options LLC, referring to the combined Tuesday-Thursday collapse of futures prices.

I think what happened is that [storage] numbers were coming in and over the previous four weeks, not including this one, and the draws were greater than what everyone expected. I think this is a one-time reversal to get the numbers back in alignment. I think numbers went incorrectly for four weeks and now they are going the other way.

"We are going to need some cold weather [to get to $4] because the producers are going to ramp up and start selling again. There will have to be some real cold weather and confirmation of that cold weather [colder than what is already in the market] to get the speculative traders to add to their position.

"I think they will get it. Next week I think we will see longer-term weather reports turn colder and bolster the market. If we get that, the specs will get long again. They are long now, but they liquidated a lot over the last two days. I think we'll get a push to $4 but not in the February contract, $3.70 to $3.75 at best, and I think the March contract will see $4 to $4.25," Harry said.

In Friday's trading weekend and Monday natural gas rocketed higher, led by Herculean advances at eastern market points.

Dollar-plus gains along the Eastern Seaboard were more than able to counter softer pricing in Texas, the Midcontinent and Midwest. The NGI National Spot Gas Average rose a stout 24 cents to $3.75. Futures trading had no answer to the exuberant physical market, and at the close February had risen 1.2 cents to $3.285 and March was higher by 2.0 cents to $3.288. February crude oil added 23 cents to $53.99/bbl following a supportive employment report by the Labor Department.

Spot gas prices in New England and the Mid-Atlantic vaulted higher as forecasts called for a winter storm to march up the East Coast reaching Canada by Sunday. forecast that Boston's Friday high of 33 degrees would slip to 30 by Saturday and ease further to 27 by Monday, 9 degrees below normal. New York City could look forward to Friday's high of 34 sliding to 28 by Saturday and 29 by Monday, also 9 degrees off seasonal norms. Philadelphia was anticipated to see see a high Friday of 34 drop to 29 Saturday and inch up to 30 by Monday, 10 degrees below normal.

Gas delivered to the Algonquin Citygate for the weekend and Monday jumped $1.24 to $9.09, and packages at Iroquois, Waddington soared $2.51 to $8.48. Gas on Tenn Zone 6 200L gained $2.14 to $9.85.

Packages on Texas Eastern M-3, Delivery shot higher by $2.48 to $6.16, and gas on Transco Zone 6 on its way to New York City gained $2.53 to $7.85.

Not only were temperatures expected to be below normal, but heavy snowfall was also expected. "A storm developing in the Gulf [Coast] states will race to the North Carolina coast by [Saturday] morning and to Nova Scotia by Sunday morning," said meteorologist Elliot Abrams.

"Loaded with moisture, it can dump a foot of snow in less than 12 hours but will have a sharp northern edge. Where the snow is wet, trees will topple and power will be cut. Deeper into the cold air, it will be a powdery snow that blows, drifts and hides things (such as traffic stopped just ahead of you)."

Other market hubs couldn't match the gains in the East. Gas at the Chicago Citygate was up a penny at $3.33, and deliveries to the Henry Hub rose 2 cents to $3.32. Gas on Panhandle Eastern fell by 7 cents to $3.18, and deliveries to Opal were quoted a dime lower at $3.16. Gas at the PG&E Citygate was flat at $3.47.

Monday power loads in the Mid-Atlantic were forecast higher than Friday. PJM Interconnection forecast that Friday's peak load of 39,867 MW would reach 41,977 MW Monday.

Overnight weather models showed near-term moderation.

MDA Weather Services in its Friday morning six- to 10-day outlook said, "The forecast sees a sizable change in the warmer direction today in the South and along the East Coast, which comes as a result of increased unsettledness in the southern Midwest acting to limit the southward extent of a colder Canadian air mass into the U.S. from mid to late period. Strong aboves are now expected to average the period in parts of the South, including in Texas, while much aboves span northward into the Northeast. Strong cold will remain in place from Western Canada toward the Northern Plains, with the coldest air being found there in the early half of the period."

MDA said risks to the forecast include the "Euro model show[ing] some cold air damming potential late in the East; but given the positive tilt to the pattern, this is likely only a brief and marginal cold risk. Texas could peak warmer still."

Traders see continued weakness of another 15 cents. "[Thursday's] data reinforced our short term convictions that nearby futures will decline further to the $3.13 area where we will look to approach the long side in anticipation of another weather driven price up-turn that could approach last week's highs," said Jim Ritterbusch of Ritterbusch and Associates in a note to clients.

"But we will also note that the storage deficit against 5 year averages per [Thursday's] data is considerably smaller than expected at only about 21 Bcf. So, until another Arctic blast shows up within the forecasts, supply would appear sufficient to preclude a sustainable price advance. But as seen on many occasions during the past 3 months, the temperature views can change dramatically within a very short time frame in prompting some vicious price reversals either up or down. Regardless, we will look to approach the long side on further price weakening while we also suggest maintaining bull spreads such as long April-short December 2017 positions."

The Labor Department reported Friday morning non-farm payrolls had increased 156,000 during December, somewhat less than the 175,000 forecast by economists. The unemployment rate inched up 0.1% to 4.7%. The Dow Jones Industrial Average rose 64 points to 19,963.