A cold wave had almost completed its domination of the national weather picture, leaving only a sliver of the South from North Carolina through South Texas — along with parts of the desert Southwest — still experiencing highs in the 70s. The widespread heating load, augmented by residual support from Wednesday’s energy futures spikes, kept cash prices on the rise Thursday.

Gains remained in double digits but were smaller than the day before. They ranged from a little more than a dime to nearly 45 cents and were fairly well mixed across geographical lines, except that the Northeast tended to see most of the upticks of more than 30 cents.

Whether the market can remain firm Friday is rather iffy, one source said. Cold weather should remain supportive of prices going into the weekend, he said, but a screen drop of nearly a quarter Thursday will be a depressant, as will the normal weekend drop in industrial load. His leaning was towards moderately softer numbers based on expectations of weather moderation early next week in key market areas.

The Energy Information Administration had an ostensibly bullish storage report in announcing that only 34 Bcf got injected last week, a volume that fell short of virtually all prior guesses. But following a quick stab into $5-plus territory, December futures retreated big-time, falling 23.9 cents on the day to $4.658.

A western utility buyer had this somewhat sardonic comment: “Yeah, I saw the Nymex make its push and fail miserably. It suits me just fine to see prices fluctuate like that. It makes things a lot more interesting.”

To a Northeast marketer, Thursday was an “interesting market with Friday being the first really cold day nearly everywhere. You’d think people would be buying a lot more heavily for heating needs” through the weekend. But it might not work that way, he said, offering this rationale: those with full accounts may want to take some gas out of storage in order to achieve some flexibility in being able to inject again if the situation warrants it further down the line. Remember, the fuller storage gets, the harder it is to keep injecting, the marketer said.

Based on the above supposition of some traders gaining wiggle room on storage by taking gas out of storage rather than buying fresh production, “I could see it as plausible that EIA might report a net withdrawal [for this week] next Thursday,” he continued. However, regardless of which way it goes, he didn’t see anything big coming along in next week’s storage number; “my guess is it will be within 10 Bcf plus or minus.”

The marketer said he can’t help feeling bearish in looking at three factors: (1) the market has gotten into a storage surplus now; (2) there’s been a whole year of demand destruction caused by high gas prices; and (3) there’s been a major production increase in that year, going by rig counts. “But gas is still priced above last year’s levels,” he added. “I just don’t get it.”

The weekend market presents something of a dilemma to at least one Midwest utility, its gas buyer said. Saturday is likely to be freezing but Monday will be considerably warmer, raising the concern of potentially having too much gas on system at the end of the weekend. Most people want to sell consistent volumes over the three flow days of a weekend, and a price premium often is involved when takes have to be altered for part of that period, she noted. The utility should have enough operational flexibility to handle any variations, the buyer said; “the question is system economics.”

One trader reported significant hassles resulting from Northern Natural Gas allocating its demarcation point, saying it caused problems in shifting around supply. “Firm gas suddenly wasn’t quite as firm as it used to be,” she said. NNG often allocates at various points, but this was more major than most, she added. “We were getting cut 95% on some deals.”

Ignore El Nino, occasional warm days and National Weather Service outlooks as this heating season gets under way in earnest, the Weather 2000 consulting firm said Thursday. What you should pay attention to, it continued, are these factors:

“1) Snow. The very early stages of U.S. snowpack are building at a fast clip. With snow coverage presently extending down to Nebraska and as far east as the [Upper Peninsula] of Michigan, we are already ahead of the “Early/Cold Winter 2002” pace and well ahead of 2000’s pace. The nighttime radiation, daytime albedo and conduction properties of snow will continue more and more to intensify cold air masses originating in Canada. The role of snow in shaping U.S. weather will increase exponentially over the next 10 weeks, and start to contribute to the longevity of these cold air masses (which this early in the season is rather transient).

“2) Cold Air Milestones. New York City should break the freezing mark for the first time this season during the upcoming weekend. While this news may be ‘ho-hum’ to a Dakotas resident, such an event is remarkable in light of the recent Indian summer event to start off the month, and this event is occurring 10 days earlier than usual and almost three weeks earlier than last year!”

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