Although milder weather will begin returning Wednesday to the Northeast and Rockies, the cash market managed to sustain this week’s overall rebound at most trading locations Tuesday. The temperature increases would still leave lows on either side of freezing in several parts of those regions, and thermometer levels inching lower in other areas would chip in small amounts of heating load to partially counteract the pockets of moderation.

Westcoast Station 2, Emerson and several flat to about a dime lower points in the Northeast (mostly New England-related) were exceptions to overall upticks ranging from 2-3 cents to about 15 cents.

Tuesday’s physical market had some support from the previous day’s advance of 11.8 cents by April futures, and for a while it appeared that the screen’s positive guidance might extend into Wednesday. However, after staying in modestly higher territory for a while, the prompt-month contract retreated to a daily loss of 6.3 cents (see related story).

Current conditions are generally moderate to cool across the southern half of the U.S. and cool to very cold in the northern U.S. and Canada. However, the National Weather Service predicts that as the second half of March starts, above-normal temperatures will prevail from nearly all of the East Coast through the South, Midcontinent/Midwest and southerly parts of the Upper Plains into eastern Utah and Arizona. It only expects below-normal readings at that time in Washington state, Oregon and northern sections of California and Nevada.

The Algonquin citygate was up only about a penny although the pipeline continued to require shippers to either stay in balance or run positive imbalances, according to IntercontinentalExchange (ICE), but its ICE-traded volumes took a big jump from 168,900 MMBtu Monday to 312,000 MMBtu Tuesday.

Shippers obviously paid heed to Kern River’s urging that they adjust their Southern California border delivery nominations for Tuesday appropriately to take into account SoCalGas maintenance that reduced Wheeler Ridge capacity by 580 MMcf that day (see Daily GPI, March 4). In Evening Cycle nominations for Tuesday’s gas day, shippers nominated 151,864 Dth at Wheeler Ridge, leaving 723,136 Dth theoretically available (not counting the maintenance cutback). But nearly all of Kern River’s Kramer Junction capacity was scheduled Tuesday, with nominations of 566,438 Dth there, leaving only 562 Dth available.

A western trader said the region is starting to see some milder temperatures temporarily, and basis spreads from the production basins to the market area are tightening. It’s likely that the combination of the South as far west as Texas getting warmer by mid-month and much of the West turning colder again will tend to boost western prices.

The trader said he anticipates Ruby Pipeline applying some downward pressure to West Coast prices later this year, but his company is not making any plans yet involving Ruby capacity until it can be sure that the pipe is up and running this summer after some schedule delays. It probably will use Ruby for some 2011-2012 winter term supplies, he added.

Bentek Energy’s U.S. Natural Gas Hub Flows chart found decreased nomination levels for Tuesday flow at only nine of the 23 trading points it covers, but the size of the top dips tended to outweigh the gains. Bentek said volumes fell 298,000 MMBtu (7%) on Columbia Gas; 265,000 MMBtu (6%) at Texas Eastern M-3; 163,000 MMBtu (31%) at Northern Natural-demarc; and 159,000 MMBtu (6%) at the Chicago citygate. Only two points scored triple-digit increases, according to Bentek: Malin, up 113,000 MMBtu (9%); and NGPL-TexOk, up 102,000 MMBtu (60%).

Southern said of last Thursday its remaining storage inventories of 29.4 Bcf (or 49% of total working capacity of 60.0 Bcf) were well above the 20.6 Bcf (34%) recorded March 4, 2010 but below the 31.7 Bcf (53%) on March 5, 2009.

Stephen Smith of Stephen Smith Energy Associates said he expects a storage draw of 75 Bcf to be reported for the week ending March 4. Analyst Kyle Cooper of IAF Advisors estimated a 79 Bcf pull.

Citi Futures Perspective’s Tim Evans looks for net withdrawals to continue at least until near the end of March. He projects a pull of 84 Bcf in the upcoming report Thursday, to be followed by ones of 58 Bcf, 22 Bcf and 24 Bcf for the weeks ending March 11, March 18 and March 25, respectively.

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