Cash market prices fell just over a nickel on average Wednesday as weakness at Northeast points led a broad retreat. Natural gas futures were even softer. At the close January futures had fallen 9.8 cents to $3.320 and February sank 8.9 cents to $3.366. January crude oil added $1.58 to $89.51/bbl.

Northeast markets continued to labor under mild weather conditions and abundant supply. “It’s pretty warm, and I think a lot of people are long gas,” said a Northeast trader.

The marketer expected lower prices “if the weather stays warm, and most factories beginning Friday will be off for at least a week. Unless we get a cold snap, I don’t see demand picking up. It’s not like the economy is going crazy.”

Tom Moore, lead meteorologist at The Weather Channel issued a forecast that indicated rain showers would arrive “later on Thursday from western New York to West Virginia, but with dry conditions from most of New England to the Middle Atlantic region Thursday.” The highs Thursday are forecast to “range from the 30s along the Canadian border to near 50 around the Chesapeake Bay [with] a return to more wintry conditions from western New York to West Virginia by early Friday.”

Up and down the East Coast temperatures were forecast to be well above normal. Wunderground.com predicted the high Wednesday in Boston of 48 would ease to 45 Thursday before reaching 46 Friday, six degrees above normal. New York City was expected to see Wednesday’s high of 52 slip to 48 Thursday before bouncing to 55 Friday. The normal high in New York City is 42. In Philadelphia Wednesday’s unseasonable high of 50 was predicted to fall to 46 on Thursday and climb to 50 on Friday. The seasonal high in Philadelphia is 41 for mid-December.

“Repsol is bringing in ships and we didn’t see any of those in November,” the New York trader said of liquefied natural gas (LNG) imports. “Distrigas is also expected to see some LNG in January. They still have a contract with Qatar to deliver gas this winter.”

Quotes at the Algonquin Citygate slipped 36 cents to $4.23 and deliveries to Iroquois Waddington shed 17 cents to $4.06. Gas at Tennessee Zone 6 200 L tumbled 36 cents to $4.20.

Prices also weakened further south. Deliveries on Dominion were about 6 cents weaker at $3.19, and Thursday gas into Tetco M-3 fell 4 cents to $3.47. Shipments on Transco Zone 6 New York were quoted 5 cents lower as well down to $3.50.

Gulf points were down 2-4 cents. ANR SE came in at $3.23, lower by about 2 cents and the Henry Hub was quoted at $3.25, 4 cents lower. Gas deliveries on Tetco E LA eased 4 cents to $3.20, Tennessee 500 L was also off 4 cents to $3.27, and on Columbia Gulf Mainline next-day gas was $3.23, also lower by 4 cents. Parcels into Transco Zone 3 fell 3 cents to $3.27.

Near-term weather forecasts warmed once again sending futures into a tailspin. MDA Weather Services in its six- to 10-day outlook shows the bulk of the United States as having normal temperatures, with a ridge of below-normal temperatures extending from Montana to Colorado. “Changes were largely to the warmer side through mid-period over the Eastern half ahead of a storm system slowly moving eastward out of the south-central U.S. Though details between models vary, most guidance is in good agreement on the early period warmer themes,” the forecaster said.

How quickly things change. Prior to the updated weather forecasts, traders saw Tuesday’s gains “in anticipation of colder temperatures and larger storage withdrawals in the weeks ahead,” according to Tim Evans at Citi Futures Perspective. “The market will still have to navigate around some bearish storage data in the meantime, including Thursday’s Department of Energy storage report for the week ended Dec. 14.”

Evans sees a consensus figure for storage in the 75-77 Bcf range, and his estimate comes in at a slightly more bullish 81 Bcf. “This may look like a supportive change in contrast with the prior week’s 2 Bcf net injection, but it would be less than either the date-adjusted 101 Bcf draw from last year or the 143 Bcf five-year average drop,” he said.

The 81 Bcf figure presents “some risk for a bullish surprise relative to the consensus, although still a bearish outcome compared to the five-year average benchmark,” said Evans. By Jan. 4, he expects that the year-on-five-year surplus will grow from its current 283 Bcf to 365 Bcf.

For the week ended Dec. 14 most traders are looking at something below 81 Bcf. IAF Advisors of Houston calculates a withdrawal of 76 Bcf, and a Reuters poll of 25 traders and analysts showed an average of 72 Bcf. Industry consultant Bentek Energy predicts a pull of 77 Bcf. Last year 100 Bcf was withdrawn and the five-year average stands at 144 Bcf.

Traders are well prepared for the market’s reaction to Thursday’s 8:30 a.m. EST report. “The number comes out and it reacts in the direction of whether it’s bullish or bearish, and 10 to 15 minutes later you are back to square one. We’ve seen that almost consistently on a weekly basis,” said a New York floor trader.

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