While no references to the “Great Blizzard of January 2006” are anticipated, the market was seeing more cold weather support Tuesday than it had in more than two weeks previously. That and the return of industrial load from the extra curtailments associated with a holiday weekend were sufficient to send prices higher at most points.

The gains ranged from a little under a nickel to a little more than 35 cents. But although upticks dominated trading for Wednesday flows, there were quite a few flat to nearly 20 cents lower points in the mix.

The biggest increases were concentrated at Louisiana points in the Gulf Coast and the Northeast. Most losses and smaller gains were in the West, where issues of excess supply were looming.

Kern River, which only a week earlier had transitioned from systemwide high linepack to low linepack conditions (see Daily GPI, Jan. 11), was back to dealing with high linepack Tuesday in the three farthest downstream of its four segments. El Paso said it had faced a problem with high linepack over the weekend but the situation had stabilized by Tuesday, averting the declaration of Strained Operating Conditions (see Transportation Notes). PG&E did not issue an OFO but projected linepack bumping up against or going slightly over its maximum target levels over the next few days. And, as it has for the last couple of weeks or more, Westcoast continued to set imbalance tolerances to encourage drafting of its system.

Continued cash bullishness is a tough call, as traders warned that the fresh spell of cold will not last long. However, the screen broke a five-for-five streak of losing sessions last week by shooting 37.7 cents higher — and back above the psychologically import $9 level — in a move that was chiefly attributed to impressive strength in Nymex’s petroleum-based futures offerings. In turn, the crude oil products spikes were based on continued trader concerns about Iran’s recently renewed nuclear development program and violence in the Nigerian oilpatch (see futures story).

New episodes of icy precipitation are due Wednesday in several areas. Even the South should get some snowfall in the southern Appalachian Mountains, according to The Weather Channel. Other snow and/or freezing rain forecasts are in effect for New England and the western Great Lakes, and the Pacific Northwest’s respite from winter storms was expected to be ending Tuesday night with the arrival of a new one.

However, although the Midwest and upper West may have to put up with cold and wet conditions for a while longer, both the South and Northeast are likely to be experiencing significant warm-ups by Thursday.

Yes, it got colder in the Northeast over the weekend, said a regional utility buyer, “but a warm-up is coming right along” pretty soon. He would prefer that the lower temperatures stick around longer, saying “that would help us meet our storage withdrawal ratchets” more easily. “We’re OK right now, since we’ve still got the last half of January and all of February” for true winter conditions to return, he added, but his company is not buying any new gas currently just in case it’s forced to use more storage supplies next month than expected. “It’s a balancing act,” he said.

Operationally the utility is fine, and nothing is being curtailed, the buyer went on. He presumed the natural gas screen was following crude oil higher Tuesday, saying that might help sustain cash firmness through Wednesday.

A Midcontinent producer was in agreement, saying he thought the futures gain was enough to keep cash numbers at least modestly firm Wednesday. He perceived some developing weakness in the Midcontinent/Midwest market, noting that NGPL-TexOk had been 71 cents behind Henry Hub in weekend trading, but the spread had widened to nearly $1.10 Tuesday. He called it “pretty remarkable” for TexOk to have had such relative strength over weekend. The Chicago citygate also had weakened in relation to the Hub, he said.

Calling himself kind of bearish, the producer said utilities would like to be taking more out of storage currently so they could have a “nice bell curve” of withdrawals over the winter, “but they’re just not getting the burns on the other side.” Because of continued Nicor allocations distributed among delivery pipes, it’s easier to buy at the citygate of the Chicago-area LDC, he said. One could transport gas to Nicor and buy delivered supply at the neighboring Peoples citygate for a nice 20-cent margin, he added, but if someone who does that gets cut by Nicor, which is happening to quite a few people, then they have to pay a loan fee to Nicor for make-up gas and may be required to repay the gas during a much colder time later when prices would presumably be considerably higher.

The National Weather Service (NWS) forecast for the Jan. 23-27 workweek looks a lot like the one for this past week. Although the more-or-less vertical dividing line has receded slightly eastward, the agency still looks for above normal temperatures essentially everywhere east of the Rocky Mountains. The area where NWS expects below normal readings expanded to include all of Arizona and Nevada along with California, the southwest half of Utah and the southern edge of Oregon.

Citigroup’s Kyle Cooper said his initial estimation of storage for the week ending Jan. 13 calls for a draw “near 30 Bcf.” Weather forecasts indicate that January-ending inventories will likely be the second-highest on record. “From a comparative standpoint, yearly and historical inventory comparisons are projected to be exceedingly bearish over the next couple of weeks,” Cooper said in a Tuesday advisory. Possibly the week with the most shocking comparison will be the week ending Jan. 20. “Last year the third week in January witnessed a very large draw of 230 Bcf. Our early projection is for a draw less than 100 Bcf, and that would expand the [year-on-year] surplus in that week alone by well over 100 Bcf.”

Stephen Smith Energy Associates predicted a withdrawal of 21 Bcf.

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