While most points in the Northeast continued to decline following the recent blizzard-induced run-up, the rest of the country's cash point averages mostly continued to see small upticks.

As things returned to normal in the Northeast after digging out in places from as much as three feet of snow, Northeast cash points began their return to earth on Tuesday. After dropping approximately $3.30 on Tuesday for Wednesday delivery, Algonquin Citygates shaved off another $2.46 on Wednesday for Thursday and Friday delivery to average just over $5, according to IntercontinentalExchange (ICE). Likewise, Transco Zone 6 NY was averaging right around $5.26 after dropping $5.57 on Tuesday and just more than $2.90 on Wednesday.

Most interesting was the fact that the $2-plus drops in the northeast occurred despite no real change in pipeline constraints in New England.

Outside of the East, prices across the rest of the country mostly posted gains. Along the Gulf Coast gains were limited from a few pennies to just more than a dime, while Midcontinent averages increase from about a nickel to 13 cents. Points in the Rockies and the West saw the largest gains, with additions mostly between 15 cents and 30 cents for Thursday and Friday delivery.

"Western market points were up Wednesday over Tuesday, but I'm not really sure why," said a Western utility trader. "I think traders were feeding off of what February futures did Tuesday. The transition from January to February futures left front-month futures almost a dime higher, so I think the psychology of it all got to the cash traders a bit."

For January bidweek in the West, the trader said things were pretty quiet. "This bidweek was not as robust as previous months, which can be explained by a few factors. While January bidweek is normally a little unusual due to the Christmas holiday, this year it was especially disjointed," he told NGI. "Day one was on Thursday prior to Christmas and day two was on the Monday that followed. There was low volume on that Thursday because it probably caught some people off guard. Day two picked up a little bit and then day three on Tuesday was pretty active. As far as pricing goes, the West has been basically flat for bidweek. We still have a lot of storage gas in the ground, so generally, people are pulling from that."

Turning to weather, the trader noted that the normally "sunny West" isn't so bright. "We've had some storms roll through that have left quite a bit of flooding," he said. "Our snowpack is currently sitting 200% above normal in the Sierras, so there is an awful lot of water on the ground."

Cold weather is coming to the Rockies, and pipeline operators in that region are getting ready. Colorado Interstate Gas (CIG) issued a Strained Operating Condition to be effective for gas day Dec. 30 until further notice. The pipeline noted forecasted cold temperatures in the negatives, resulting in planned maximum withdrawals from storage. CIG's ability to absorb imbalances caused by mismatches between scheduled receipts and deliveries or imbalances arising from variations in actual gas flow from scheduled quantities is "extremely limited."

Kern River Gas Transmission said that because of the anticipated cold temperatures in its supply and market areas, "the potential is high" for supply interruptions because of freeze-offs in the various supply basins that feed the pipe.

Wyoming Interstate Company (WIC) and Kinder Morgan Interstate Gas Transmission (KMIGT) also issued cold weather alerts and implored their customers to remain in balance to avoid having to implement measures to maintain the operational integrity of their respective systems.

The Southeastern U.S. is in line for some colder-than-normal temperatures as well, and that prompted Florida Gas Transmission to declare an Overage Alert Day for Dec. 29. However, the news was not evident in NGI's FGT Citygate index on Wednesday as the point -- on limited volume -- dropped $3.68 to average $4.70.

In other news, ANR Pipeline began unplanned engine repairs at its Joliet compressor station on Wednesday, which will reduce capacity at the NGPL-Joliet interconnect to just 90,000 Dth/d through Jan. 4, 2011. The company warned this could result in the curtailment of both interruptible and firm secondary nominations during this period.

Breaking down the current dynamics in the natural gas futures market, Citi Futures Perspective analyst Tim Evans said a rally from current price levels is likely.

"We continue to see plenty of heating demand ahead of the market, with colder than normal temperatures expected for much of the continental U.S. in the the 11- to 15-day forecast period. This should translate into above-average storage withdrawals and higher prices in our view, with plenty of room for prices to rally from current levels, even if a retest of last January's $6 level is unlikely. A move to $5, though, is not unreasonable in our estimation."

Taking a peek at Thursday's natural gas storage report for the week ending Dec. 24, Evans said he is expecting a 143 Bcf withdrawal. A pull of that magnitude would be larger than both last year's date-adjusted 130 Bcf draw for the week and the five-year average draw of 118 Bcf.

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