The cash and natural gas futures markets read like a"A Tale of Two Cities" Wednesday as most cash points dropped while the April futures contract staged a quarter rally to close at $7.160. Moderating temperatures expected to swoop in for the remainder of the week allowed the Northeast to record declines ranging from just shy of a nickel to 43 cents, the latter of which was recorded by Dracut putting gas for delivery on Thursday at that location at $7.18.

The Gulf region and Texas deliveries saw declines mixed with gains. The Henry Hub stood pat at $6.82 and the Houston Ship Channel gained 3 cents to $6.33. In the Midcontinent, Chicago Citygate slid 6 cents to $6.63, while NGPL Midcontinent dropped 2 pennies to $5.92.

Softness in the Northeast was attributed to the forecasted break in that region's cold snap, which was expected to take place on Thursday. Temperatures in the Northeast stayed mostly in the 30s and 40s Wednesday, while the Mid-Atlantic saw readings in the 40s and 50s. However, many expected to see a 20-degree swing to higher temps in the Northeast on Thursday.

"All of the price action was on the right-hand side for sure," said a Northeast trader. "Sellers were sellers and buyers were sellers for Thursday delivery. Up in the New England states there is a significant warm-up expected to occur from Wednesday to Thursday, so demand just fell off and created the price swing," he told NGI. "It is still trading at seasonal cash-basis levels, so it is not like it is getting killed or anything like that, but cash basis wasover a dollar for the last week or so because of that cold weather. Some points came off about 40-45 cents on the day."

The Rockies saw some more declines Wednesday as Opal and Kern River shed 49 cents each to both finish at $4.03 and Questar dropped 50 cents to $3.70. Cash prices out west were a mixed bag. While PG&E Citygate dropped some 12 cents to $6.61; SoCal Border climbed almost 16 cents to $6.01.

"There really was a lot of weakness in the West. The Nymex was strong, but the cash market is diverging," a West Coast utility trader said. "High storage inventories, a lot of gas and low demand have teamed to push prices lower. We are definitely experiencing some short-term weakness in the West. I don't know why futures popped Wednesday because we continue to see moderate temperatures and comfortable withdrawal season-ending inventories.

"We were really busy Wednesday morning; I was mainly concentrating on AECO and the PG&E Citygate," the trader said. "While the Nymex was going up, PG&E Citygate was going down."

With Wednesday's deals for Thursday delivery already in the books, traders and the industry turned their attention to the Energy Information Administration's storage report Thursday morning for the week ended March 16. While there is some uncertainty on whether the withdrawal cycle would be broken, three reports before the official end of the withdrawal season, the northeast trader said he was not sure the market was ready to make that switch just yet.

"I've heard everything from a 20 Bcf build to a 20 Bcf withdrawal," he said. "It seems some of the banks are looking for a build and some of the hard-core traders are saying 'draw.' Personally, I am still on the draw side of things."

Expectations are ranging from a build of 20 Bcf to a draw of 23 Bcf, according to a Reuters survey of 22 estimates, which produced a median draw expectation of 3 Bcf.

According to its data, Golden, CO-based Bentek Energy sees a fairly significant injection being revealed. "Jumping the gun by two weeks, Bentek's Flow Model indicates that the storage withdrawal season flipped to an injection of 17 Bcf, bringing stocks 15.4% below the five-year high (last year) and 18.6% above the five-year average."

While the data research firm said the shoulder season brings a degree of uncertainty to its model, it believes the Producing region injected 22 Bcf and the West region added 5 Bcf, while the East region withdrew 10 Bcf for the week. "Note that with the beginning of the transition between withdrawal and injection season, the uncertainty around Bentek's Flow Model has increased," the company said. "Our Flow Model's methodology for predicting injections and withdrawals for facilities not connected to interstate pipelines is limited during shoulder month transitions."

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