Despite The Weather Channel (TWC) predicting icy commutes to work and school for Midwest residents Wednesday, prices continued to fall at nearly all points Tuesday. The overwhelming softness also defied support from a 10.3-cent increase by February futures on the preceding Friday and the return of industrial load from a holiday weekend.

A large majority of the market recorded losses from a little less than a nickel to nearly 30 cents. Several flat to barely higher points in the Rockies averted an across-the-board run of declines. The PG&E citygate also was up a couple of pennies, due largely to the utility’s low-inventory OFO (see Transportation Notes), but Malin fell nearly a dime.

Screen backing for the cash market disappeared after the prompt-month futures contract reversed course to a decline of 13.4 cents Tuesday (see related story).

Forecasts of Wednesday lows on either side of freezing or down into the teens and 20s remained plentiful for Canada and most of the northern U.S. from the Rockies through the Upper Plains and Midwest into the Northeast. Yet the softness of Tuesday prices suggested to one source that buyers were leaning more heavily on still-abundant storage gas for their needs in lieu of buying spot gas.

And there isn’t much heating load left across the southern tier of states, where predicted lows aren’t getting below the upper 40s in many locations and highs are reaching the relatively balmy 60s and low 70s.

Aside from PG&E’s low-inventory OFO, pipeline restrictions related to cold weather have virtually vanished.

Ron Denhardt, a vice president with Strategic Energy & Economic Research, said he projects a storage withdrawal of 245 Bcf being reported for the week ending Jan. 15.

The Baker Hughes Rotary Rig Count chalked up an addition of 30 rigs actively searching for natural gas in the U.S. during the week ending Jan. 15, creating a new total of 811. Two rigs were idled in the Gulf of Mexico, Baker Hughes said, but that was handily offset by the activation of 32 more units onshore. Its latest tally was up 5% from a month earlier but down 34% from the year-ago level.

SunTrust Robinson Humphrey (STRH) analysts noted that the late rig count jump represented the largest weekly percentage gain (3.8%) in drilling activity in nearly three years. Since reaching its cyclical nadir in July, the U.S. gas rig count has increased on average by over five rigs per week.” While the 20%-plus rise in drilling from the trough has been impressive, STRH said, “we would note that a decent portion of the increase is likely attributable to liquids-rich areas such as the Eagle Ford Shale and Granite Wash play. Moreover, as demonstrated by data from Smith International, it appears rig count operators are including Barnett Shale combo/oil drilling activity in the gas rig count. Interestingly, a meaningful migration toward higher liquids content areas could have a degrading effect on natural gas rig/well productivity relative to the levels experienced last year.”

©Copyright 2010Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.