Natural gas cash averages for the most part Thursday gained or lost a few pennies, but Northeast points saw double-digit gains as temperatures in New England were expected to drop and pipelines issued curtailments.

Futures prices rose sharply as the Energy Information Administration inventory report showed a withdrawal of 132 Bcf for the week ended Jan. 27, slightly higher than what had been anticipated, and traders elected to cover shorts. At the close of futures trading March had advanced 17.2 cents to $2.554 and April had added 18 cents to $2.715. March crude oil slipped $1.25 to settle at $96.36/bbl.

Next-day prices at California points were flat to a penny higher as hefty volumes changed hands. “It looked to me as though some parties are doing some storage spreads and that may have accounted for the incremental volumes,” said a California marketer.

Volumes at PG&E citygate rose from Wednesday with quotes flat at about $2.76. Malin was about a penny higher at $2.47 and SoCal Citygate was unchanged at close to $2.74.

The marketer also noted that the differential between Malin and PG&E citygate had narrowed somewhat but not to the degree expected. “The market has settled down, and it has been a mild winter. It hasn’t narrowed quite as much as I thought, but if the Rockies get any kind of weather, that spread is going to decrease a little bit more.”

That differential may just narrow Friday as forecaster AccuWeather.com said “a raging snowstorm and even a blizzard are on the way from the east slopes of the Colorado Rockies to part of the central Plains to end the week.” The forecaster called the storm a “High Plains Drifter” but said it was still in the developing stages.

“Snow will continue to streak northeastward followed by increasing winds, low visibility, large snowdrifts and poor travel spreading from eastern Colorado to southwestern and central Nebraska to northwestern Kansas. In some areas the storm will begin as rain,” AccuWeather.com said.

In the Midwest quotes were higher by a couple of pennies. Deliveries to the Chicago Citygate added two cents and parcels into Alliance were quoted as much as four cents higher.

The greatest increases on the day were noted at Northeastern points where temperatures were forecast to drop and a pipeline issued a capacity constraint notice. Next-day gas into Algonquin was up a quarter and Iroquois Waddington deliveries added just over 30 cents. At Dracut, gas for delivery Friday rose almost 20 cents.

AccuWeather.com predicted the high in Boston Friday would reach 35, down from Thursday’s high of 44. Wind gusts as high as 38 mph were expected to add a wind chill that would drop the highs to the low teens.

Algonquin Gas Transmission restricted some gas deliveries sourced upstream of its Southeast Compressor Station for delivery downstream of the station. “No increases in nominations sourced upstream of Southeast for delivery downstream of Southeast, except for Primary Firm No-Notice nominations, will be accepted,” the pipeline said.

Futures traders got a surprise boost Thursday from an inventory report showing usage to be somewhat greater than expected. The 132 Bcf draw was higher than a survey by Energy Metro Desk of 42 traders and analysts showing a 128 Bcf average, and also greater than industry consultant Bentek Energy, which calculated a 130 Bcf draw. A Reuters survey of 23 analysts showed a sample mean of 127 Bcf with a range of 111-136 Bcf. Last year 187 Bcf was pulled, and the five-year average is 186 Bcf.

Short-term traders were not terribly impressed with the gains. “I wouldn’t be surprised if we were trading $2.25 come Monday morning,” said a New York floor trader. “I was surprised at the move. I thought we would linger at $2.45, but not $2.55. I think we may have topped out here at $2.55.”

Tim Evans of Citi Futures Perspective was looking for a draw of 121 Bcf and concluded that “the 132 Bcf in net withdrawals from U.S. natural gas storage for last week was more than expected and marks a second consecutive week with higher-than-forecast withdrawals. This does signal at least some more constructive shift in the background supply-demand balance, although likely of limited short-term support for prices…Even assuming the tighter background balance, we also continue to see below-average storage withdrawals for the weeks ahead, a bearish fundamental context.”

Evans forecasts that the storage surplus will increase form 547 Bcf on Jan. 20 to a whopping 802 Bcf on Feb. 17. “[A]s long as the storage surplus is rising, we see corresponding downward pressure on prices,” he said in comments to clients.

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