With late-January cold looking weaker than previously expected, and with government storage data likely to turn up another underwhelming storage withdrawal, natural gas futures sold off sharply Wednesday. The February Nymex contract went as low as $2.104/MMBtu before settling at $2.120, down 6.7 cents. March fell 6.8 cents to $2.083.

In the spot market, sharp gains in New England offset discounts throughout the rest of the Lower 48 to send NGI’s Spot Gas National Avg. 6.0 cents higher to $2.120.

Between disappointing winter weather and a glut of production, “it’s hard to be a bull in natural gas” at the moment, according to Powerhouse President Elaine Levin.

Technically speaking, bulls need to hold the line, as prices are approaching major support levels at $2.083 and $2.029, Levin told NGI.

“There are some significant lows here,” she said. “Watch out if they get broken…These support levels for the bulls really have to hold.”

Sellers stepped in quickly in Wednesday’s trading after the European weather data trended warmer overnight, Bespoke Weather Services said. Models as of Wednesday still maintained a transition to more seasonal conditions for the next couple weeks, but with some “concerning” signs in the outlook, according to the forecaster.

The high latitude pattern “does not look supportive of notable colder intrusions into the United States. This could mean that models are still too cold” for days six through 15 of the outlook period, Bespoke said. This reflects “a bias we have seen for several weeks now, and the market appears nervous about this as well.”

Such a bias in the models could see the near-normal conditions in the forecast Wednesday trend toward warmer-than-normal levels, although the warmth would be “far less extreme” compared to the past few weeks, the forecaster said. “If that is the case, price action makes sense, as warmth trumps all else in the middle of winter.”

Meanwhile, the exceptionally warm conditions of the recent past will produce a well-below-average withdrawal for Thursday’s Energy Information Administration (EIA) storage report, according to estimates.

As of Wednesday, projections pointed to a withdrawal just shy of the triple-digit mark for the week ended Jan. 10. A Bloomberg survey showed a median estimate for a 93 Bcf pull, with estimates ranging from minus 84 Bcf to minus 101 Bcf. A Reuters survey showed a 95 Bcf pull, with a range of minus 87 Bcf to minus 102 Bcf.

Intercontinental Exchange EIA Financial Weekly Index futures settled Tuesday at a 94 Bcf withdrawal. NGI’s model predicted a pull of 106 Bcf.

Last year, EIA recorded an 82 Bcf withdrawal for the similar week, and the five-year average is a withdrawal of 184 Bcf.

Last week, EIA reported a 44 Bcf withdrawal for the week ended Jan. 3, a print well outside the 2015-2019 withdrawal range from 81 Bcf to 315 Bcf.

New England spot prices popped Wednesday as the National Weather Service (NWS) was calling for the mild temperatures over the eastern United States this week to turn much colder over the next few days.

“Very mild temperatures for this time of the year will give way to the arrival of an area of Arctic high pressure surging southeast down from Canada” Wednesday night and Thursday. This was expected to follow “in the wake of a quick-moving storm system crossing the Great Lakes region” Wednesday evening and New England early Thursday, the forecaster said.

“A swath of heavy snow is expected with this system, with some areas over portions of northern New York and northern New England expected to receive in excess of 6 inches of snow by midday Thursday. The very cold air in the wake of this storm will settle in through Friday but then begin to modify and pull away by this weekend.”

Algonquin Citygate surged $1.980 to average $4.460, while Tenn Zone 6 200L jumped $2.465 to $5.000. There was also some uplift farther upstream in Appalachia, where Texas Eastern M-3, Delivery added 9.0 cents to $2.055.

Meanwhile, paced by a 15.0-cent decline at Henry Hub, discounts were the norm for most of the Lower 48.

In the Midwest, Michigan Consolidated dropped 8.0 cents to $1.975.

In Texas, Houston Ship Channel tumbled 13.0 cents to $1.900; farther south, Texas Eastern S. TX gave up 5.0 cents to $1.985.

A new round of maintenance on the Valley Crossing Pipeline (VCP) could disrupt flows from South Texas into Mexico starting Thursday, Genscape Inc. analyst Matthew McDowell said.

In a notice to shippers issued in late December, VCP announced two maintenance events — one on Jan. 3, and another running Thursday through next Wednesday — that it said would “restrict all receipts, deliveries and transportation on the Nueces Header and the Brownsville Pipeline.”

During the Jan. 3 event, VCP limited deliveries at its interconnect with the Sur de Texas-Tuxpan pipeline to 127 MMcf/d, a decline of 589 MMcf/d (82%) versus the prior 30-day average, McDowell said.

“Despite this drop in cross-border flow via VCP, exports to Mexico were buffered by an increase in nominations at the Los Ramones pipeline,” the analyst said. “Nominations at Los Ramones jumped by 479 MMcf/d compared to the prior 30-day average of 2,031 MMcf/d.

“Since becoming operational, a notable portion of Sur de Texas-Tuxpan flows have come from diversions away from Los Ramones. The maintenance event on Jan. 3 highlighted the ability of Los Ramones to still absorb displaced cross-border flow, but the duration” of the maintenance scheduled to begin Thursday “could introduce instability to the Mexican gas market.”