With storage use growing and a slight moderating trend from the early-week eastern cold snap in place, prices were in retreat across the board Wednesday. Most losses were less than a quarter, but some Northeast citygates fell by around a dollar or more after leading the preceding trek upward.

The declines occurred despite a fresh blast of polar air scheduled to move into the Upper Midwest Thursday and lows in the 20s due to persist in the South. What counted was that temperatures in general wouldn’t be quite as cold as in the first half of the week, sources said.

One sign of dropping demand was The Weather Channel’s listing only six states (Alaska, Massachusetts, Montana, Oregon, Washington and Wyoming) where winter storm warning were posted Wednesday, as opposed to 14 states Monday.

Wednesday’s declines may have surprised some traders who counted on a further uptick in futures Tuesday and the fact that heating load would remain robust despite a modest warm-up to keep the bull market going. After seeming indecisiveness during the morning cash trading session with forays both up and down, the screen eventually succumbed to a loss of nearly a dime in the afternoon. Even the petroleum-related futures products’ shooting towards the stratosphere was unable to resuscitate the weak natural gas contract. Crude oil for January delivery spiked by more than $2 to $44.19/bbl after the government reported a drop in crude inventories and flat distillates (which include heating oil) stockpiles for the previous week.

“The bulls have been put back in their pen and it’s bear hunting season now,” quipped a Northeast marketer. A lot of supply came into the market late, resulting in late quotes tailing off, he added. The region is starting to back off from subfreezing highs for the most part, and a lot of Northeast buyers that had gotten into long supply positions lately are working them off, the marketer said. Also, Wednesday’s softness was accentuated by greater pulling from storage following the price spikes on Monday, he said.

A Calgary-based producer concurred that storage use is growing. There’s still a pretty good amount of demand around but not as much as earlier in the week, he said, adding that it was “nice and warm” at 45 degrees F. in the Calgary area Wednesday afternoon. “We were ribbing our guys in Houston about being about as warm as they were, he said. He observed numbers softening a little towards the end at the Chicago citygate, which often points the way for next-day price movement. The screen showed a bit of strength while cash deals were still being made but fell off later, which was another bearish signal, he said.

Only a bullish storage report Thursday could rally prices before next week, the producer continued. “Anything more than 70 [Bcf] from EIA probably would do it. There’s so many people short now that we might get a quick pop. Otherwise, less than 50 Bcf should get a sharp drop.” A withdrawal of 50-70 Bcf would be considered neutral, he said, “but I don’t expect that.” Instead, he looks for a definitive move one way or the other.

Yes, it’s still cold but warming up again a little, reported a Lower Midwest utility buyer. Adequate baseload meant his company didn’t even need to buy any swing gas Wednesday.

It’s gotten “pretty cold in the northern end of Florida,” so Florida Gas Transmission wants utilities in the state to make sure they’re covering their deliveries with adequate receipts, said a buyer for one such utility, referring to the pipeline’s tightening the tolerance of an OFO-like notice slightly (see Transportation Notes). Otherwise it’s a quiet market, she said.

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