A barely higher Cheyenne Hub in the Rockies was the only point that avoided falling prices Wednesday. The factors that have caused softness in post-Christmas trading at nearly all points were unchanged — light heating load due to unseasonably moderate weather for late December, prior-day futures weakness and bearish attitudes about abundant storage.

Wednesday’s losses ranged from 2-3 cents to more than half a dollar (Canadian) at Westcoast Station 2. Westcoast has been battling excess linepack issues with its imbalance tolerance range for more than a week.

The current storage surplus is about to get another goose upward if analyst predictions are correct. Ron Denhardt of Strategic Energy and Economic Research expects the Energy Information Administration on Friday (a day later than usual because of the Christmas holiday) to report a 60 Bcf withdrawal for the week ending Dec. 22. That would fall far short of the comparable pulls of 162 Bcf last year and 127 Bcf in the five-year average, Denhardt noted.

Southern Natural Gas illustrates how slowly the storage drawdown is going. As of Dec. 21 its working gas inventory in two facilities stood at 54.4 Bcf, or 91% of the total capacity of 60 Bcf, the pipeline said. That compares with 42.4 Bcf (71%) on Dec. 22, 2005 and 46.8 Bcf (78%) on Dec. 23, 2004, Southern said.

According to a Reuters news service story, 140 MMcf/d of production in the High Island and East Breaks sections of the Gulf of Mexico offshore southeast Texas has been shut in as a result of a rupture of the High Island Pipeline System, which carries light crude oil. The pipeline was damaged Sunday by a ship’s anchor. Divers are inspecting the line, and at this point there is no prognosis on how long the outage will last. It was unclear how the rupture of an oil line affected natural gas production, and calls to HIPS operator Plains All American Pipeline were not answered.

January futures expired, falling another 27.5 cents to $5.838. That’s a whopping $2.48 less than the $8.318 December settlement and a virtual guarantee that January indexes will be plummeting.

The weather picture keeps growing bleaker in terms of gas price support. In its eight-to-14-day forecast issued Wednesday for the Jan. 4-10 period, the National Weather Service expects above normal temperatures everywhere in the U.S. except for the southern halves of California and Nevada, nearly all of Arizona, the southwest half of New Mexico, and West and South Texas. Normal conditions are due in those areas, the agency said. An even more bearish factor for the gas market is that the greatest variations above normal will be concentrated in the key gas-consuming regions of the Midwest and Northeast.

It’s the same old story — mild weather and a weak screen, said a Midcontinent producer. However, he did see storage players “buying a little” Wednesday as they played the spot price spread against the Nymex strip. It’s a good strategy, he said, because people can buy gas at a lower cost now than they will be able to during 2007. He noted that Panhandle Eastern and OGT were fetching $5.25-30 in daily deals Wednesday, but baseload for next month on both pipes is running about $5.45. The storage play gets even bigger going out a year, he said, noting that January 2008 futures were priced above $8, well over $2 more than the January 2007 expiry.

Bulls must be in a funk because there’s “no weather” anywhere on the horizon, a Northeast marketer said. It “wasn’t much of a bidweek,” he said, adding that he saw little January business getting transacted Wednesday. That was primarily because he thinks most Northeast baseload trading for January got done last week. The big move lower by January futures during the three-day countdown to expiration will lead to major declines in first-of-month indexes, he said.

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