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Growth of Heating Load Boosts Most Points

With colder weather returning to much of the East and remaining in the northern half of the West along with Western Canada, prices increased at a large majority of points Tuesday.

Only a loss of a couple of pennies at Niagara, along with numerous cases of flat quotes, were left out of gains ranging up to about 50 cents. The Chicago citygate was edged out for the largest increase only by CenterPoint-East as the Windy City's low is projected to fall to the mid teens Wednesday.

Wednesday's cash market will continue to have moderately negative prior-day screen guidance after the April futures contract fell another 2.5 cents Tuesday (see related story).

The Midwest will be the coldest market area outside Western Canada Wednesday, which helped produce strong gains for Midcontinent numbers. But the Midcontinent is contributing a fair amount of heating load itself, as Oklahoma City, after peaking in the upper 70s Tuesday, was predicted to fall to just above freezing that night and see a freezing low Wednesday.

Flat numbers dominated in the Northeast despite regional temperatures expected to bottom out in the 20s and 30s Wednesday.

Most of the South will be ending its fling with mild spring-like weather as a cold front pushes into the region by Wednesday morning, according to The Weather Channel. The colder conditions will mostly affect the central section of the region that day, with the southern half of Texas and states at the eastern end still expected to peak in the 70s before the front reaches them Thursday.

The Rockies will actually be warming a bit Wednesday, but sub-freezing lows are still in the forecast, while the Pacific Northwest can also expect slightly higher temperatures.

A customer-specific low-inventory OFO by PG&E failed to provide any upward traction for Malin and the PG&E citygate, both of which were flat. But the continuation by Northern Natural Gas of a System Overrun Limitation in all market-area zones through at least Wednesday resulted in upticks of about 30 cents and 15 cents for the pipeline's demarc and Ventura trading points, respectively.

Southern Natural Gas may have helped to reinforce beliefs that storage is likely to end the traditional withdrawal season at record levels with a bulletin board posting. With less than a month to go in the season, Southern said that as of March 5 its working gas inventories stood at 31.4 Bcf, or 52.3% of their total capacity of 60.0 Bcf.

Noting the freezing lows forecast in his state, a Midcontinent producer said the Oklahoma intrastate pipes were good customers for his gas. Tuesday's market was a far cry from just a few days earlier, he said, when his company had some buyers returning unneeded supplies to it over the weekend.

Prices tended to go "a little bit lower" in late deals, the producer continued. He considered it a toss-up on whether overall price firmness can continue Wednesday. It will be starting to warm up again Thursday in the Midwest, he noted, but it will still be cold enough to generate substantial heating load.

A utility buyer in the South welcomed the forecast for a low in the upper 30s in his area Wednesday, saying "we need some of this colder weather coming along" to help the utility meet storage withdrawal targets. He said he was hoping that one of the company's supplying pipelines would grant a waiver on season-ending storage maximums, as it has done in the past two years, but it's looking now like it won't happen this time.

He said the utility sold some gas Monday to avoid adding it to storage accounts. It tried to sell back to the original supplier, "but he didn't want it," the buyer said. The company will reassess its withdrawal season-ending strategy Monday, he added.

The National Weather Service (NWS) excluded only the lower half of Florida's peninsula from its forecast of below-normal temperatures during the March 16-20 workweek everywhere west of a line running southward from eastern Montana through eastern New Mexico to the Big Bend area of Texas. It looks for above-normal readings in nearly all of California along with the western half of Oregon and the western edge of Nevada.

Of course, the NWS prediction isn't nearly as bullish for gas prices as it would have been in the last few weeks, since by mid-March the reference points for "below normal" are more moderate with winter nearing an end.

Stephen Smith of Stephen Smith Energy Associates is projecting a storage withdrawal of 101 Bcf for the week ending March 6. That's up from his original estimate of 97 Bcf, Smith said.

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