Cash natural gas prices on average overall rose 29 cents Wednesday as cold, wintry weather was forecast to march through the Great Lakes and keep temperatures seasonally cold. However, without the distorting affects of multi-dollar price surges at Northeast locations, the market scored a more modest 8 cent gain. Great Lakes points firmed as cold and winter storm warnings were anticipated Wednesday. At the close March futures had risen 1.9 cents to $3.418 and April had gained 1.4 cents to $3.464. March crude oil slipped 2 cents to $96.62/bbl.

Great Lakes points all showed gains. In his blog Tom Skilling of the Chicago Weather Center said, “The winter storm watch for southern Wisconsin has been upgraded to a warning.” Several counties in southern Wisconsin were under the warning from all day Thursday. There also is a winter storm watch for Lake and McHenry counties in Illinois, but the watch did not include Chicago.

Skilling forecast that the 34 high in Chicago Wednesday would ease to one degree on Thursday and inch to 35 on Friday. The normal high this time of year in Chicago is 35.

“We’ve been buying gas since we are so unsure of the weather,” said a Michigan marketer. “You have to be careful not to buy too much gas. One weather report says it’s going to be colder, and another report says it’s going to be warmer. February is a rough month. We did buy gas on Consumers for Thursday. We bought one piece at $3.55 and another at $3.57.

Gas for delivery at Dawn Thursday rose 7 cents to $3.69, and Chicago Citygate gas was quoted at $3.52, higher by 4 cents. On Michcon, deliveries Thursday were seen at $3.55, up 6 cents and on Consumers parcels came in at $3.52, up 4 cents. On Alliance gas for Wednesday delivery rose 3 cents to $3.53.

The Northeast continued its volatile ways. AccuWeather.com said “New York City and the northern mid-Atlantic are on the edge of a major storm that will hit New England as a blizzard Friday and Friday night. Only if two storms, an Alberta Clipper from the west and a storm from the south, merge very quickly will there be more than a manageable amount of snow (a foot) in New York City, northern New Jersey, southwestern Connecticut, Long Island, northeastern Pennsylvania and upstate New York.”

“While this is a possibility, it would be difficult for a storm to do this without a blocking area of high pressure to the northeast,”said AccuWeather.com meteorologist Rob Miller. “Such an area of high pressure would slow the forward speed of the storm down long enough to cause it to strengthen into an intense area of low pressure.”

Next-day prices at eastern points weren’t waiting for a blocking area. Thursday gas at Algonquin Citygate gained $7.13 to $22.63 and at Iroquois Waddington next-day gas rose 25 cents to $8.45.

Deliveries to New York City on Transco Zone 6 gained $1.07 to $11.74, but parcels on Tetco M-3 were 15 cents higher at $3.88. Buyers on Dominion saw prices rise 9 cents for Thursday deliveries to $3.45.

Other market centers posted solid gains as well. At the Henry Hub, next-day gas rose 7 cents to $3.41 and on El Paso Permian Thursday deliveries gained 8 cents to $3.36. At Opal parcels were quoted at $3.44, also 8 cents higher, and at PG&E Citygate gas for Thursday delivery rose 8 cents to $3.75.

Analysts see cold weather adding to further upside price moves, and the April contract confined to a range. Tuesday’s “price rebound amid new speculation of a return of cold weather past should be surpassed as the 11-15 day forecast progresses into colder-than-normal territories over the next few days,” said Societe Generale analyst Laurent Key. He concedes that “the only thing about weather models that has been consistent so far this year is their volatility, so opportunities to re-enter on the long side of NG for the short-term should reappear.

“Accordingly, front prices may be stuck in a range until the end of the winter, but trading at this time of the year — with only two month left of potential high demand weather — makes it easier to assess short-term opportunities.”

Key has simulated price outlooks for the April contract and the entire summer part of the curve, based on a cold-, a normal- and a warm-weather scenario simulated for both the balance of February and the month of March.

“In terms of price outcome, the price range for the April contract is $3.20 to $3.90, quite wide, but definitely within the range of what has been traded on the front this winter,” Key wrote. “The market seems to currently be pricing slightly warmer-than-normal weather for Feb. 16 to March 31, so the rally is not over yet for those who expect a confirmation in forecast reversals. Anything below $3.30 is considered a buying opportunity. Any rally that pushes prices above $3.65 would make us bearish.”

Market technicians are looking for a seasonal low in prices in the weeks ahead. “While the epicenter of the seasonal bottoming window is now upon us, it is important to note that the last three fall-to-winter declines have bottomed later than average,” said United ICAP analyst Brian LaRose. “[It was] early March in 2011, early April in 2010 and 2012. Will we see a later-than-average bottom in 2013? As this retreat from $3.933 still appears short in both extent and duration, we believe the answer is yes.”

Estimates of Thursday’s Energy Information Administration storage report fall between last year and the five-year average. Last year 94 Bcf was withdrawn and the five-year average is for a pull of 165 Bcf. United ICAP forecasts a draw of 121 Bcf, and a Dow Jones survey showed a 132 Bcf average. Industry consultant Bentek Energy predicts a 123 Bcf pull.

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