With impressive early winter cold amplifying the risks posed by lean stockpiles, the recent rally in the natural gas futures market showed no signs of letting up Tuesday — and if anything seemed to accelerate. Meanwhile, another day of widespread weather-driven gains yielded some of the strongest early winter spot prices since 2014; the NGI Spot Gas National Avg. tacked on another 35.5 cents to $4.410/MMBtu.

After another day of volatile trading, the December Nymex futures contract settled a whopping 31.3 cents higher at $4.101, near the top of Tuesday’s 20.8-cent trading range. The gains were even more impressive further along the winter strip. January added 34.7 cents to $4.147; February climbed 35.9 cents to $4.019; and March settled 41.9 cents higher at $3.712.

“This is a market gripped by fear of low storage levels but not one that is trading intraday off clear catalysts; a warmer European operational model did hit prices briefly, but most significant intraday moves appeared more random,” Bespoke Weather Services said Tuesday. “We head into the overnight session less convinced of short-term upside than we have been thus far through the week,” with cold expected to peak Wednesday and lead to less strength in the cash market, while afternoon weather models showed bearish trends despite a small increase in gas-weighted degree days (GWDD).

Bespoke said cold risks appeared to “decline markedly” in the long-range Tuesday, with a negative Arctic Oscillation block potentially keeping temperatures near to slightly below normal in key demand regions but cutting them off from “true polar air.”

“This is the pattern that increasingly looks to dominate into the end of November; GWDDs slightly above average are possible, but the Pacific trended far less favorable for significant cold,” and if the negative North Atlantic Oscillation and negative Arctic Oscillation “recede we could see warm risks increase quite quickly…Still, there is clearly enough blocking to inject fear into the market, and as long as blocking remains we will struggle to turn our sentiment bearish even above $4.”

Meanwhile, the recent gains in cash prices highlight the potential gas-to-coal switching economics that could be in play this winter, with recent data showing that even a 25 cents/MMBtu move in gas prices can have a “dramatic” impact on power burns, according to Energy Aspects.

Despite last week’s looser-than-expected Energy Information Administration storage report, “fundamentals look tight for the next several weeks on the cold, with the week ending Nov. 16 now showing the season’s first triple-digit withdrawal,” the firm said. “The market has not had a triple-digit November withdrawal since the 2014 polar vortex, though that withdrawal was much higher.

“As we have stated before, the market will continue to move in sympathy with weather forecasts,” Energy Aspects analysts said. “However, as the overall inventory level is expected on current forecasts to get shaved so early in the heating season — 100 Bcf is knocked off our estimates on early cold alone — realized cash prices this winter should see a higher central tendency, barring a mild event later in the season.”

Henry Sports $4 Handle

After generally trending higher since the start of the month in the lead-up to the season’s first spell of winter cold, spot prices continued to strengthen Tuesday, including sharp increases in New England. Benchmark Henry Hub added 9.5 cents to $4.035. The last time prices at the Louisiana hub averaged above $4 in November was in 2014.

A strong cold front was expected to continue moving through the east-central and southern United States Tuesday before reaching the East Coast by Tuesday night, according to NatGasWeather.

“With lows of single digits and 20s further north, and 30s to lower 40s over the southern U.S., national heating demand will be very strong the next few days,” the forecaster said. “A weak milder break between cold shots is still expected late Thursday into Saturday for minor easing of national demand.

“This will be short-lived as yet another strong cold shot remains on track to impact the central, southern and eastern U.S. Saturday through Tuesday or Wednesday, stalling mild high pressure from setting up until Nov. 22-24,” NatGasWeather said.

The firm noted that the milder trends for the Nov. 22-24 period were less impressive in recent model runs Tuesday, with guidance showing cold “stubbornly” holding over the Northeast.

Average prices at Algonquin Citygate nearly doubled, adding $3.975 to $8.535. Tenn Zone 6 200L surged $3.700 to $8.400.

“New England gas demand has remained at elevated levels since Nov. 7 and is climbing due to the current spate of cold weather hitting most of the mainland U.S.,” Genscape Inc. analysts Josh Garcia, Dominic Eggerman and Robert Lance said. “Current forecasts indicate much colder weather beginning Wednesday, which will then tail off to historical values by the weekend. This should drive the continued high demand for gas in New England for the rest of the week.

“…No major maintenance events are currently scheduled to restrict gas during the upcoming weather forecast,” the analysts said. However, on Monday (Nov. 12), “Tennessee Gas Pipeline declared an emergent repair issue on the Fitchburg to Gloucester Lateral downstream of Station 267 in Middlesex County, MA. The repairs are estimated to restrict about 49 MMcf/d of gas flows through the compressor station toward Boston.”

Further upstream in Appalachia, points gained by double digits. Dominion South picked up 15.5 cents to $3.840.

Early November receipts showed Appalachian production down slightly after crossing the 30.0 Bcf/d threshold in late October, according to Energy Aspects. This is a potentially concerning sign given that the region this winter will “serves as a major component of the ”latent storage’ that the Northeast will lean on to mitigate massive withdrawals,” the firm said.

The firm estimated recently that Appalachian output was averaging 29.3 Bcf/d month-to-date in November. Despite new capacity from projects like Atlantic Sunrise, the Rover Pipeline and Nexus Gas Transmission, “the gas in these projects seems to be mostly redirected from other pipes rather than new production.

“…Our forecast shows Appalachia growth slowing through the heating season as various factors conspire to depress regional gains to just 3.4 Bcf/d year/year thus far in November,” Energy Aspects analysts said. “Several producers, including EQT and Cabot Oil & Gas, have lowered 4Q2018 guidance in the most recent round of earnings, citing the need for more efficient expenditure.

“The heating season could see weather-related supply disruptions in the form of freeze-offs if frigid temperatures materialize,” analysts added. “During the heating season, producers can compete for space on pipes, with utilities shipping gas for winter heating. Cabot mentioned in their second quarter earnings call that early cold would also increase pressure in the pipes and reduce what a pipe can accept in total volume.”

Elsewhere, West Texas prices generally held on to Monday’s big gains in the aftermath of a natural gas liquids pipeline outage over the weekend that lowered output from the Permian Basin.

Genscape senior natural gas analyst Rick Margolin said the firm’s production estimates showed about 0.6 Bcf/d of Permian output offline after a third-party contractor accidentally struck the DCP Sand Hills Pipeline in Texas.

“Total Permian Basin production (from both Texas and New Mexico) is now under 8 Bcf/d, about 1.2 Bcf/d below the month-to-date average prior to this event,” Margolin said.

Waha climbed 12.5 cents to average $3.850, while El Paso Permian added 6.0 cents to $3.825.