With people in Canada and the northern half of the U.S. waking up Tuesday morning to temperatures in the vicinity of freezing or lower, and such conditions expected to continue through Wednesday for the most part, it was hardly surprising to see prices rising again Tuesday at a large majority of locations. However, a significant decline by November futures appears likely to nip this week’s cash rally in the bud.

A few scattered losses averted an across the board run of increases. Empress and NOVA Inventory Transfer fell about C5-8 cents in spite of sub-freezing lows in the 20s remaining in the Alberta forecast for Wednesday. The rest of the market ranged from flat to up a little more than 30 cents, with predictions of cold weather prompting most of the largest gains to be concentrated at Northeast citygates.

Although Tuesday’s cash market had prior-day screen support from Nymex’s 11-cent uptick Monday, a couple of sources agreed that the downturn of 29.2 cents by prompt-month futures Tuesday (see related story) is almost certain to drag physical numbers lower Wednesday.

While remaining the market’s highest-priced point by far, the Florida citygate took the biggest hit again Tuesday after Florida Gas Transmission (FGT) ended an Overage Alert Day (see Transportation Notes).

Forecasts of more cold weather north of the southern half of the U.S. were doing the most to sustain cash strength Tuesday. Lows in the 30s are expected to continue from the Rockies and Upper Plains into most of the Midwest and Northeast through the next few days.

Widespread rainfall was due to keep most of the South mild to cool Wednesday, effectively wiping out more air conditioning demand without creating any appreciable heating load. Texas is predicted to see a fairly significant rise of highs into the mid 80s to low 90s for the next couple of days but then see a major cooldown starting Friday. And the days of approaching 100-degree peaks may be over for the year in the desert Southwest as Phoenix is not expected to surpass the upper 80s Wednesday.

Cash quotes “should be off some” Wednesday following the major Nymex weakness, a Texas-based marketer said, but he thinks the market will see at least a moderate rebound by the weekend as cold weather continues in northern market areas. But the general forecast looks rather bearish for next week, he added. Below-normal temperatures will be concentrated in the South, and that’s not where they will generate much heating load at this time of year, he said.

Noting that both Northern Natural Gas and Southern Natural Gas are ending constraints related to high linepack (see Transportation Notes), the marketer said that indicates some recent concerns about excess supply are easing.

A utility buyer in Florida agreed with the expectation of futures-induced cash softness Wednesday. Although highs will continue to hit the 90 area in the southern half of his state, the buyer said it looks like cooling rain currently inundating large portions of the Southeast will be moving into northern Florida in the next couple of days, which was what allowed FGT to end its Overage Alert Day.

In its six- to 10-day forecast posted Tuesday afternoon for the Oct. 19-23 workweek, the National Weather Service (NWS) predicted below-normal temperatures in nearly all of the South (except for the southern two-thirds of the Florida peninsula) from East Texas through most of Arkansas and Kentucky into northern Virginia. It looks for above-normal conditions in the southern half of the West, with such readings expected everywhere south of a line running eastward along the northern ends of California, Nevada, Utah and Colorado before curving to the south through the western portions of Kansas, Oklahoma and Texas. Normal temperatures are likely in most of the U.S., NWS said.

Stephen Smith of Stephen Smith Energy Associates said he is projecting a storage build of 47 Bcf for the week ending Oct. 9, which is down significantly from his earlier estimate of 54 Bcf. Citi Futures Perspective analyst Tim Evans is looking for a modestly larger injection of 50 Bcf to be reported for that week, followed by additions of 5 Bcf and 40 Bcf for the weeks ending Oct. 16 and Oct. 23, respectively.

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