Physical gas prices rose Tuesday for Wednesday delivery mostly between a couple of pennies to just shy of a dime, except for eastern points, some of which declined by nearly 20 cents. Futures caught a bid as rumors of more production cuts circulated and nuclear outages posted a five-year high. March rose 10.1 cents to $2.532 and April gained 8 cents to $2.700. March crude oil slipped 17 cents to $100.74/bbl.

Most points got a boost from higher futures. “A lot of the points that trade off Nymex Henry Hub just keep moving off whatever the front month does. We had a little run-up around 8:15 to 8: 30 CST, and March went from the $2.47 range to the $2.55 range and that kind of dragged things [cash] up with it,” said a Houston-based cash trader.

“We also heard there were rumors of additional production cuts. I am guessing that some of these rumors get started by producers. That might be a logical assumption.”

He noted also that producers were not content with some of the summer basis numbers. “Producers are saying, ‘I’m not selling that. There’s no way we are selling that low.’ [but] I just ran my numbers and some of the supply areas show basis has strengthened a little bit. It’s nothing significant, but a tad stronger,” the trader said.

ANR SE was just shy of a dime higher, and on Columbia Gulf Mainline prices were up over a nickel. The Henry Hub was also quoted just over a nickel higher.

Eastern points fell an average of 13 cents, and that was a reflection of milder temperatures in New England and other spots. “Boston is expected to see a high in the 40s Wednesday, so the prices you are seeing are a reflection of the weather,” said a Northeast marketer.

He added that the weather forecasts through the end of February and into March showed “nothing that would give the market any kind of lift.” He said he expected eastern and New England pipelines to trade around the $3.30 level during that time.

Tennessee Gas Pipeline Z6 200L fell just shy of 15 cents and Iroquois Waddington shed about the same. Algonquin Citygates were quoted a couple of pennies shy of 20 cents lower.

Midwest prices were also firm. Alliance deliveries were seen a little more than a nickel higher, and gas into the Chicago Citygates was quoted higher by 4 cents.

Futures traders were not impressed by the day’s rise. “I heard something about production cuts in an email but didn’t see who it was,” said a New York floor trader. “I think you have to sell rallies.”

The trader thought that Thursday’s inventory report “would be another low number, but I think this is already in the market,” he said.

A record number of nuclear generating facilities was reported offline. According to NGI’s Nuclear Reactor Status Report 11,974 MW from 24 plants was offline Tuesday. Government figures for the last five years show a maximum outage for this date at 8,781 MW. In 2011 6,580 MW was offline.

Government figures for the five trading days ended Feb. 7 showed directional traders for the most part exited long positions. The Commodity Futures Trading Commission in its weekly Commitments of Traders Report reported that at IntercontinentalExchange managed money reduced long futures and options contracts (2,500 MMBtu per contract) by 11,532 to 521,603, and short holdings increased by 36,149 to 275,677. At the New York Mercantile Exchange long futures and options (10,000 MMBtu per contract) fell by 4,519 to 219,458 and short positions dropped by 8,003 to 290,261. When adjusted for contract size, long futures and options fell by 7,402 and short positions rose by 1,034. For the five trading days ended Feb.7 March futures retreated 3.1 cents to $2.472.

A fundamentals-focused view suggests that further price weakness may be forthcoming, but market technicians see time on the side of the bulls.

Analysts see continued weakness in the forward curve. “Although the spread curve is finding a modicum of support, we still see risk favoring further contango expansion as long as end-of-season supply remains headed toward the 2.2 Tcf area,” said Jim Ritterbusch of Ritterbusch and Associates in a morning note to clients. “Forced storage withdrawals or liquidation that could develop by next month continues to conjure up an extremely bearish environment for the physical market later this month and next, especially if weather trends remain tilted in a bearish direction. We will continue to emphasize a sharp contrast between the bearish short-term weather factor and the indicated production curtailments that are a very long-term fundamental influence.”

Market technicians hint that an end to the pervasive downtrend may be in sight. “Normally when a market congests near the lowest, the implication is further downside,” said Brian LaRose, analyst with United-ICAP. “However, time is no friend of the bears. The longer we sit, the more it will look like natgas is slowly carving out a bottom. If another leg down to $2.087-2.964 is in the works, the bears need to prove their case and fast. Otherwise, expect a slow, rounded bottom from here.”

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