Physical prices for natural gas to be delivered Thursday inched higher at most points across the country on Wednesday as the market anticipated two pending events — weather and storage — that could have lasting impacts.

Thursday’s storage report by all accounts is expected to indicate record withdrawals, well above the previous record of 285 Bcf recorded for the week ended Dec. 13, with some traders anticipating a 300 Bcf figure. Also pending is a forecasted massive cold front that meteorologist Joe Bastardi said the market is woefully unprepared for.

The futures arena was not impressed as prices eased on Wednesday with February gas dropping 4.4 cents to $4.325 and March losing 3.7 cents to $4.278. February crude oil rose $1.58 to $94.17/bbl.

Most estimates of the Department of Energy (DOE) storage report by the Energy Information Administration (EIA) revolve around 300 Bcf, but the range is wide.Energy Metro Desk last Friday found a range of 255 Bcf to 320 Bcf, but the average of 15 analysts came in at 300 Bcf. Kyle Cooper at IAF Advisors calculates a withdrawal of 309 Bcf, and Ritterbusch and Associates sees storage down by 302 Bcf. United ICAP figures on a 300 Bcf pull also.

Last year 156 Bcf was withdrawn, and the five-year average draw comes in at 159 Bcf.

High numbers for last week’s burn for the polar vortex weren’t confined to the northern part of the country. AGL Resources in Atlanta, GA, reported Wednesday that its three distribution companies doubled their sendout for Jan. 6 and Jan. 7 to about 15.1 Bcf for the two-day period, setting records along the way. Nicor Gas (IL), and Atlanta Gas Light recorded the second highest deliveries in their history at 4.5 Bcf/d and 2.1 Bcf/d, while Chattanooga Gas in Tennessee set a peak day record of 1.3 MMcf.

The big question is what sized storage withdrawal is already priced into the market. “We are looking for a big number. I think the range is 285 Bcf to 315 Bcf, but the consensus is 302 Bcf-303 Bcf,” said a New York floor trader. “That would put us at the lowest storage levels since 2005. I think 300 Bcf is in the market, but if you get a bigger draw than that, this market is going to go.” He thought that a draw of 310 could cause some fireworks.

“Even a 300 Bcf pull will jerk the market up initially, like it always does. Then it will settle back in.” The trader suggested that market resistance was now at $4.43 and $4.50 above that. Prices of $4.30 and $4.25 were seen as short term support.

Physical market players are taking a somewhat different stance. They want to get all physical trading done and out of the way prior to the 10:30 a.m. EST report. “I think everybody thinks it’s going to be a bullish number, set a record and all that kind of stuff,” said an industry veteran.

“When the market went under $4.00 [Jan. 10], then people were thinking the market needed to be a lot higher because of the number that is going to show up. The market has moved up some 30 cents, and I think a lot of the large withdrawal is built into prices. I’ve heard expectations from 300 Bcf to 312 to 315 Bcf, but if it come out in the low 290s that may be a bearish sign, even though it’s a record breaker. It would be well below expectations. I wouldn’t think it would be below expectations, but then again you never know.

“When you get into the 300 Bcf range, there is a lot of room for the number to be out of whack. If you see something in the high ‘teens to low 320s, watch out.”

Others agree that Thursday’s storage report looms large. The “market also seems to be focusing more closely on the prospects for Thursday’s DOE storage report with the consensus expectation walking up into the 290s, closer to our own 303 Bcf forecast and quite clearly bullish relative to both the date-adjusted 156 Bcf net withdrawal from a year ago and the 159 Bcf five-year average,” said Tim Evans of Citi Futures Perspective.

He calculated that the year-on-five-year deficit would jump to 459 Bcf following Thursday’s report, then contract, and then hit 416 Bcf for Jan. 31’s storage report.

“Although that won’t mean a new extreme in the deficit, it would still make the market about 100 Bcf tighter on a seasonally adjusted basis at the end of January than it was on Jan. 3. This tighter storage level will leave the market more vulnerable to any further waves of cold over the balance of the winter. Overall, we think prices may be able to reach the $4.75-5.00 range, depending on what further cycles of cold come along,” Evans said.

A forecast weather event may offer all the incentive the market needs to blow right through $4.75 to $5.00 if WeatherBELL Analytics’ Bastard is correct. Bastardi is adamant the market doesn’t have much of an idea what is about to hit. He is forecasting that in the 11- to 15-day period a massive ridge of cold, as much as 15 degrees below normal, will impact the United States from New England to Texas to Montana. Heating degree day (HDD) accumulations are predicted to mushroom nationally to 215.8, nearly double 2013’s tally of 119.9 and a 30-year average of 136.8.

“It’s time to pull out the stops,” Bastardi said. “In talking with people I know around the nation, I believe that there is a lack of preparation for what is coming. There were reports of oil companies running out of oil for delivery in the early January outbreak as the market was caught off guard by the Dec. 27 run of U.S. models that prompted ideas of warm in the period that we are now awaiting natural gas draw numbers on [Thursday].

“I think the late-week pronouncements last week have people playing catch-up with what is coming. I have opted to go to the extreme, paralleling this with the threat of a Reagan-esque outbreak of mid-January 1985. While it may not get all the way, even if it gets close it is well beyond what I sense is the sentiment now. I do not think this is any ordinary cold outbreak,” he said Wednesday in a 20-day forecast.

Physical market trading was relatively subdued. Most points gained but added no more than a nickel to a dime. Thursday deliveries to the Henry Hub added 8 cents to $4.44, and gas at the Chicago Citygates rose by 4 cents to $4.80.

Major gainers on the day included Tetco M-3 Delivery at $4.74, up 23 cents. Dominion was higher by 23 cents, also to $4.30, and Transco Zone 6 NY saw quotes jump 28 cents to $4.92. Some of the biggest losses occurred at Algonquin Citygates, down 52 cents to $6.63, and deliveries on Tennessee Zone 6 200 L dropped 40 cents to $7.57.