Responding to generally weak weather-related demand, healthy use of storage and the screen’s pre-New Year’s Eve drop of about a quarter, swing prices continued to decline Monday in the still-nascent new year. The common range of declines between about 20 cents and about 65 cents reflected larger drops than occurred last Thursday in most cases.

Analysts have pointed out that medium-term forecasts call for most of the East to see normal or above normal temperatures into at least mid-January. However, several parts of the West were trying Monday to recover from a series of weekend winter storms, with prospects good for revisitation Tuesday by another major storm in the interior West, according to The Weather Service.

It also said a new gush of “very cold air” plunging southward from Canada will be meeting up with moist air coming northward from the Gulf Coast, making dangerous icing likely in western areas of the Midwest along with some Plains and Midcontinent sections.

Despite the hints of renewing strong heating load in the West and Midwest, it was considered somewhat doubtful that those conditions would do more than limit prices in the affected markets to modest losses. One source pointed out that not only did natural gas futures extend Thursday’s losses by another 35.9 cents, but that was accompanied by major losses in the rest of Nymex’s energy complex.

Northern Natural found the approaching cold to be enough to declare a System Overrun Limitation day Tuesday in Zone E/F (see Transportation Notes), which a utility buyer said is comprised primarily of the pipeline’s service area in Minnesota and Wisconsin. As evidence that use of storage gas was picking up in the market area, the buyer noted that Northern was allocating storage overrun withdrawals because of excess requests for the service.

The Minerals Management Service said Gulf of Mexico shut-ins related to last September’s visit by Hurricane Ivan had dwindled to 585.69 MMcf/d as of Monday, or about 9.5 MMcf/d less than the volume it was reporting in mid-December (see Daily GPI, Dec. 17). The federal agency said at that time it was changing the timing of its shut-in reports from twice a week to every two weeks, with the next ones being due Jan. 3 and 17. However, due to the Martin Luther King Day holiday being observed on the 17th, MMS said Monday that the next tally of offshore outages will be released on Jan. 18 instead.

A utility buyer in the Lower Midwest said he bought no new gas for Tuesday because of current relatively mild temperatures, but expected to be active in the market again Tuesday due to forecasts of area snow that night. He didn’t notice any significant continuing holiday absences by traders Tuesday, but said he had talked only with “a couple” of regular suppliers. He said this week has the “perfect weather pattern for us:” cold in the western Midwest and Upper Plains but warm on the East Coast. “There’s not that many people where we are, but plenty in the East, so they help bring down prices for us,” he said.

Lehman Brothers analyst Thomas Driscoll said he expects a storage withdrawal of 160 Bcf to be reported for the week ended Dec. 31.

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