Bearish weather fundamentals and a weaker prior-day screen be damned! The cash market shrugged off its negative influences and posted gains at nearly all points Thursday. A couple of instances of flatness and an intra-Alberta decline were the exceptions to overall price firmness.

Most of the increases were fairly moderate, ranging from a couple of pennies to about 45 cents. The largest ones of about 20 cents or more tended to cluster in the Rockies, Pacific Northwest and Southwest basins.

One can’t rule out further gains in a market that has been roundly labeled as very bearish over the last couple of weeks but has seen nearly as many up days as down days in that period. However, it will be quite difficult for cash numbers to avoid a setback Friday when the extra loss of industrial load associated with a holiday weekend will be added to widespread mild weather in mid-January and Thursday’s drop of nearly 30 cents in February natural gas futures.

The Energy Information Administration’s report of a 20 Bcf storage pull for the week ending Jan. 6 was within the range of prior expectations but below consensus estimates. At least it didn’t shock the market like the previous report’s net 1 Bcf injection for the last week of December. Nymex traders took a while to get there but finally sent the screen to a 29.5-cent lower daily settlement. It was the first close below $9 for a prompt-month contract since last August, which not coincidentally happened before the arrival of Hurricane Katrina (see futures story).

Although above normal temperatures will continue to dominate the weather outlook in many areas going into the weekend, there is likely to be snow in the Ohio Valley by Friday evening, and a cold front will move through the lower Mississippi Valley into the Southeast, according to The Weather Channel. The Northeast can expect an invasion of colder air towards Saturday and Sunday, TWC said. So the market is not totally devoid of heating load.

To a midwestern utility buyer, the strength of crude oil futures is about the only thing supporting physical gas prices. His only purchases recently have been for injection into storage. “That’s the only place we’ve got to put it” because customers aren’t running their furnaces as much as usual in a January, he said. Temperatures have been 30% warmer than normal in his area in recent weeks, he said.

The buyer expects the next storage report to be a near-repeat of Thursday’s withdrawal. After all, he noted, the weather this week has been virtually identical to that of last week. “It won’t be long before we’ve built up” a hefty inventory surplus to year-ago levels, he said.

A Gulf Coast producer pointed out that even with Thursday’s gains, daily prices are still significantly below first-of-month indexes. Quotes moved up at first Thursday morning and then fell back prior to some late small upticks on a few Gulf Coast pipes after the storage report came out, she said. Although she wasn’t as definite about it as the Midwestern utility buyer, the producer did suggest that “maybe it’s crude oil strength that is holding up cash gas.”

The storage number was about where she had been hearing predictions, the producer went on, although she found it curious that the Producing region was still in injection mode for the second week in a row. Traders still can’t attribute price firmness to weather because “there isn’t any,” she said.

She reported being told by someone in Florida that the Atlantic Ocean is very much warmer than normal, which should lead to an even more active hurricane season this year than in 2005.

A western utility buyer observed that there was a “fear factor” over supplies built into the pre-winter market, which accounted for the overall price run-up that lasted into December. “But we’re in good shape now” with little time left for heavy-duty winter to show up, he said. He expects Westcoast Station 2 to stay weak in relation to NIT (NOVA Inventory Transfer) for the foreseeable future, saying summer basis spreads have Station 2 about C35 cents back of NIT.

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