Physical gas prices overall were flat Wednesday with most price averages fluctuating within a couple of pennies. Even the typically volatile Northeast traded within 1-2 cents of Tuesday’s prices.

Futures traders going into Thursday’s inventory report judged the market to have greater downside risk than upside potential. At the close May had risen 5.4 cents to $4.214 and June was up by 5.5 cents to $4.243. May crude oil continued rolling downhill, off $2.04 to $86.68/bbl.

Great Lakes marketers were in a buying mode as concerns of a May pipeline outage sent them scurrying for supplies. “The trunkline to Consumers is going to be down for maintenance from May 1 to May 9 and we are a little concerned that if another major pipeline were to go down, deliverability may not be there,” said a Michigan marketer. “We are buying more even though we don’t like the prices, but we want to make sure [customers] have enough in storage to get them through May.”

“If we weren’t facing that particular issue we would probably be holding back [buying] and depleting storage even more. We’ve been here before and it can get ugly. We bought two separate packages on Consumers at $4.56 and $4.58 but on Michcon we only paid $4.49. We are out of the winter and thought we could take a little breather, but not so.”

It may read April on the calendar, but it feels more like February or March in the nation’s midsection. Forecaster predicted Chicago’s Wednesday high of 50 would rise to 66 Thursday before tumbling to 46 on Friday. The normal high in Chicago is 60. In Omaha, NE, Wednesday’s 48 degree high was anticipated to retreat to 43 Thursday but make it up to 50 on Friday. The normal high in Omaha at this time of the year is 64. Denver’s high reading of 54 on Wednesday was expected to drop to 43 on Thursday and rise to 55 on Friday. Normally, Denver sees highs of 62 in mid April.

“The major storm of the West will emerge into the Plains on Wednesday with a mess of precipitation and strong to severe thunderstorms,” said meteorologist Kari Kiefer. “As the system shifts eastward, cold temperatures and ample moisture will allow moderate to heavy snow showers to continue from parts of the Central and Northern Rockies into Nebraska and parts of the Dakotas through the day.” Additional snowfall accumulations on Wednesday were to range from five to 12 inches over the lower elevations and 12 to 18 inches over the mountains. “In addition to significant snow, strong winds will continue across these areas leading to periods of blowing and drifting snow.”

Gas for delivery Thursday on Northern Natural Ventura slipped 2 cents to $4.19, and on Alliance next-day gas was seen at $4.21, down 3 cents. At the Chicago Citygates, gas was quoted at $4.27, down 4 cents. On Michcon, gas was seen at $4.48, a penny higher, and on Consumers, next-day deliveries posted a 2 cent gain to $4.57. Gas at Dawn fell about a penny to $4.69.

Eastern points were little changed. Gas on Dominion was up a cent at $4.21, and on Tetco M-3 next-day packages were seen at $4.38, down a cent. Gas bound for New York City on Transco Zone 6 was also down a cent at $4.38.

Texas locations were flat to a little higher. At Carthage, gas was quoted at $4.15, unchanged, and at Katy, next-day gas came in at $4.18, up a cent. On El Paso, Permian Thursday gas was unchanged at $4.08, and on Transco Zone 1, packages were seen at $4.13, 3 cents higher.

Futures traders thought Wednesday’s gains might be attributed to traders jockeying for position, or positioning their computers in preparation for Thursday morning’s Energy Information Administration inventory report. “The bulls are holding on to the upside and feel they are in a good spot,” said a New York floor trader. “Usually the weakness in crude would have some impact on natural gas, but that doesn’t seem to be the case. We are going into weather [East] that doesn’t mean we should be rallying. I would be very cautious being long at these prices.”

The trader suggested that the estimated build numbers in the upper 30 Bcf range were already in the market, but “if it doesn’t come in as expected, that could be the cue to send the market lower.”

Analysts are expecting the first build of the injection season. Last year 21 Bcf was injected and the five-year average build is 39 Bcf. A Reuters poll of 24 market participants showed a sample mean of 34 Bcf with a range of 15 Bcf to 45 Bcf. A similar Bloomberg survey revealed a 36 Bcf average, and industry consultant Bentek Energy’s flow model forecasts a 38 Bcf increase.

As anomalous as it may seem to be talking cold weather in April, temperature forecasts once again turned cooler overnight Tuesday. MDA Weather Services in its Wednesday six-to 10-day outlook showed a broad fairway of below normal temperatures extending from Montana and New Mexico on the west to Ohio and North Carolina on the East and all the way to South Texas.

“Again today [Wednesday] the main themes in the forecast remain unchanged though some detail changes were seen. Strong cold remains on track to yet again drop into the central U.S. at the start of the period, with the strong cold making a push south yet again to Texas.”

The Eastern Seaboard, however, remains normal. “Increased confidence brings strong ‘belows’ now down to the Texas coast by mid to late period. A stronger high overall in the central U.S. brought slightly colder changes to much of the region. The West Coast pushed a bit hotter as well with a round of offshore flow expected. The core cold again looks to spare the East Coast.”

Tim Evans of Citi Futures Perspective ultimately sees milder temperatures and lower prices prevailing. “Although the market keeps saying ‘not yet,’ we continue to look for natural gas prices to tip more dramatically back to the downside, as winter heating demand fades and a year-on-year decline in power sector demand becomes an issue. We continue to see plenty of potential for long liquidation.”

Evans calculates a 37 Bcf storage build in Thursday’s inventory report and sees that as consistent with industry thinking. “While Thursday’s data may be a relatively near match with the five-year average, the temperature forecast still includes enough colder-than normal temperatures to limit storage injections for the weeks ending April 19 and April 26 in supportive fashion.” According to Evans’ model, the year-on-five-year deficit will expand to 127 Bcf by May 3.

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