In a calm before the storm moment, natural gas values for delivery Wednesday plunged in Tuesday's trading but still retained lofty levels. A forecast winter storm over much of the East was expected to be brutal, and next-day power prices firmed ahead of the event.

Physical gas for delivery at eastern and Midwest points took multi-dollar hits, as did points in the Midcontinent. March futures rose 24.5 cents to $4.824 and April added 16.4 cents to $4.570. March crude oil slipped 12 cents to $99.94/bbl.

Along the East Coast next-day gas prices skidded despite forecasts of the storm's arrival less than 24 hours away. Forecaster predicted that the high in New York City Tuesday of 25 degrees would rise to 27 Wednesday before reaching 35 on Thursday. The seasonal high, however, in the Big Apple is 41. Philadelphia's Tuesday high of 26 was anticipated to reach 27 Wednesday and 35 on Thursday. The normal high in Philadelphia for mid February is 43. Washington, DC's high on Tuesday of 34 was predicted to drop to 30 Wednesday before settling back to 34 on Thursday. The normal high for Washington this time of year is 46.

Moderating temperatures were not on the minds of folks in the Deep South, Mid-Atlantic and much of the Northeast as a paralyzing winter storm was predicted. Jeff Masters, meteorologist, said, "A state of emergency has been declared for all of Alabama, northern Georgia, Northern Mississippi and northern Louisiana as the South's second serious winter storm of 2014 spreads snow, sleet and freezing rain across the region on Tuesday and Wednesday. Freezing rain at a temperature of 29 degrees was falling at 9 am EST Tuesday morning in northern Mississippi in Columbus, and in Birmingham, AL, where it was 32 degrees.

"The storm, called Winter Storm Pax, begins its most dangerous phase Tuesday night into Wednesday, when rain changes to freezing rain from eastern Georgia through central South Carolina. As much as one inch of freezing rain is expected in Augusta, GA, and Columbia, SC, and widespread power outages would result if these ice amounts materialize. Atlanta, which was shut down by the 2.6 inches of snow Winter Storm Leon brought to the city on Jan. 28, is expected to receive a nasty mix of freezing rain, snow and sleet Tuesday night and Wednesday from the new storm, making travel dangerous or impossible. Just a slight shift in the track of the storm or atmospheric conditions could greatly alter the amount of snow and freezing rain this storm brings," the forecaster said.

On a more positive note, Masters said, "The cold air behind this storm will be short-lived, and high temperatures are expected to warm into the upper 40s by Thursday across South Carolina and northern Georgia."

From, there, Pax is expected to travel up the eastern seaboard, dropping a foot or more of snow in Mid-Atlantic and Northeastern cities.

IntercontinentalExchange reported that next-day peak power Tuesday at the PJM Interconnection rose $15.64 to $169.48/MWh.

Industry consultant Genscape reported early Tuesday that "Weather forecasters predict that the latest cold spell will subside by the end of the week, but Appalachia demand has increased by 1.5 Bcf/d to 18.0 Bcf/d from last week's 16.5 Bcf/d. Columbia gas, which has critical days for storage in effect for the rest of the week, has also deemed Feb. 12 as a transport critical day in all market areas on the TCO system."

Gas for delivery Wednesday into Dominion fell 22 cents to $7.04 and deliveries on Transco Leidy slipped 22 cents to $3.21. Next-day packages on Tetco M-3 delivery dropped $4.35 to $17.50, but gas bound for New York City pn Transco Zone 6 NY picked up 41 cents to average $20.74.

Next-day gas in the Midwest suffered multi dollar losses as temperatures were also expected to moderate. predicted that Tuesday's high of only 14 in Chicago would jump to 25 Wednesday and reach 34 on Thursday, just one degree below normal. Milwaukee, WI was expected to see its 14 degree Tuesday high reach 23 on Wednesday and 32 on Thursday. The normal mid-February high in Milwaukee is 32.

Wednesday packages on Alliance tumbled $8.30 to $8.48, and deliveries to the Chicago Citygates fell $7.27 to $8.22. Gas on Northern Natural Ventura fell $8.38 to $8.24, and gas on Michcon slid $5.41 to $8.56. On Consumers, Wednesday parcels dropped $6.83 to $9.64.

Locations far removed from the Southeast storm also saw quotes decline Tuesday. In the Midcontinent, deliveries on ANR SW for Wednesday fell $2.97 to $7.19, and gas on Oklahoma Gas Transmission dropped $1.53 to $7.41. On Panhandle Eastern, gas for Wednesday changed hands at $7.36, down $2.44, and deliveries into the NGPL Midcontinent Pool fell $2.26 to $7.16.

Futures traders cited another expected eastern storm and expectations of a sizeable withdrawal in Thursday's storage report as reasons for the day's double-digit advance. Kyle Cooper of IAF Advisors forecasts a pull of 228 Bcf, well ahead of last year's 151 Bcf pull and a five-year average of 161 Bcf.

Longer term, analysts see the market stabilizing after its recent run to the downside. Addison Armstrong of Tradition Energy sees traders "[factoring] in forecasts for moderating temperatures and declining heating demands in the next couple weeks. Gas prices have now dropped nearly $1.20, or 20%, in less than a week of trading amidst indications that the severe winter weather and record heating demands of the past couple months is nearing an end. But severely depleted storage levels that have dropped to a 10-year low and expectations of a heavy spring nuclear power plant maintenance and refueling season will provide support for the market in the coming months."

MDA EarthSat in its Tuesday morning one- to five-day outlook shows a strong temperature divide with points east of a line from North Dakota to West Texas below to much below normal and to the west above to much above normal.

Analysts see the storage deficit as gathering market interest. "The updated views have been interpreted by some as signaling an end to this exceptionally cold winter given the upcoming arrival of March and expiration of the March futures contract," said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. "However, we will reiterate that short-term demand expectations are only part of the equation and that the supply side will demand renewed focus going forward. While the dynamic of deficit expansion will likely be reversed after next week's EIA release, we are maintaining an opinion that downside follow-through will need to price in an unusually low supply with which to begin the injection cycle in about six weeks.

"We feel that the shift toward some broad-based temperature moderation going forward toward month's end has been largely discounted via the sharp price reduction of around 15-20% that has been seen in recent sessions. From here, we feel that a pre-EIA storage rally is likely that could carry nearby futures back up to the $5 region. With this in mind, we are shifting focus to the April contract where we would advise probing the long side within the $4.38-4.42 zone while maintaining close stop protection below $4.35 on a close-only basis."