Prices continued to rise at most points Thursday as frigid temperatures and various types of frozen precipitation (sleet, freezing rain and snow) occupied more and more of the U.S. and Canada. A 32.3-cent spike by January futures on Wednesday gave extra support to Thursday’s cash market.

Sizeable retreats of up to $2 at points serving the New England area (Algonquin citygate, Dracut, Iroquois Zone 2 and Tennessee Zone 6) were the only exceptions to overall gains ranging from about a nickel to $1.50 or so. Transco Zone 6-New York City reclaimed the top price average with the day’s biggest increase by far; other upticks were capped at a little more than half a dollar at Texas Eastern M-3.

New England will get a slight respite Friday before the second of a one-two winter storm punch arrives early in the weekend. Boston is expected to see Thursday’s high around 29 degrees rise to 38 Friday, although the low is due to remain in the mid 20s.

The second storm that will slam the Northeast this weekend would be forming Thursday night over the Four Corners area of the Southwest, according to The system will be fueled by moisture from the Gulf of Mexico as it makes its way eastward through the southern Rockies into the already ice-ravaged Midcontinent and Midwest before arriving in the Northeast, the forecasting service said.

The South, which had been enjoying relatively moderate weather, was starting to see thermometer levels dive across the region’s western half Thursday. The east end of the South will feel some winter pinch Friday, although most of Florida will continue to see highs around 80 or so.

The Energy Information Administration’s estimate of a 146 Bcf withdrawal from storage during the week ending Dec. 7 handily surpassed prior expectations centered around 130 Bcf. Nymex traders shrugged off the apparent bullishness of the number, however, and pushed January natural gas futures 21.5 cents lower amid weakness throughout the energy futures complex.

Then-Tropical Storm Olga had appeared to have a chance at becoming a price-boosting threat to Gulf of Mexico production Wednesday morning, having been upgraded from a subtropical storm and seeing a change in projected tracking that aimed it just north of Mexico’s Yucatan Peninsula. However, the out-of-season storm was downgraded to a tropical depression that afternoon and fizzled out entirely overnight.

In anticipation of the second Northeast winter storm, Transco said it will not allow any make-up of due-shipper imbalances Monday but will allow due-pipeline make-ups.

Conditions Thursday were “not too bad” inland, said one Northeast utility buyer. His area was getting snowfall, but he said he wouldn’t call it a “storm.” The utility was buying some spot gas in order to keep storage withdrawals at the targeted pace spread over the winter, he said.

A Midcontinent marketer considered it something of a toss-up on calling Friday’s cash price direction. After a little reflection, though, he said he thinks the weekend industrial load loss and Thursday’s screen dive should make most of the market a bit softer Friday, especially with a general warm-up starting next week in some areas. However, Northeast prices may hold up Friday with a second storm coming up, he added.

The marketer said he believes intermediate-term market fundamentals are weak enough that futures should fall below $7, “but it keeps rebounding from there.”

Pipelines seem to be handling the cold snap pretty well, he continued. Panhandle Eastern has an ongoing restriction at Haven, KS, but that’s relatively minor, he said.

The marketer commented that it “seems like a bad time” for the projected startup of interim REX-West firm service near the end of next week because it would happen with the long Christmas holiday weekend imminent.

Noting that PG&E had posted a low-inventory OFO for Thursday rather late in the day Wednesday, a western trader said the PG&E citygate started trading earlier than usual Thursday and very large volumes were changing hands. Its gain of about a quarter was driven by cold weather in Northern California, he said. The Whitewater Compressor Station outage on TransColorado (see Transportation Notes) is tending to send more Rockies gas westward that otherwise would try to seek markets to the east, he said.

©Copyright 2007Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.