Cash traders did not consider forecasts of Wednesday lows in the teens and 20s in the Northeast and Midwest — and as low as around zero in the Minneapolis area — to be sufficient to rally prices in post-holiday business Tuesday. Following another below-expectations storage pull report last Thursday, use of storage supplies was believed to be a continuing significant factor in suppressing demand for spot gas.

Several flat to a little more than a dime higher points, primarily in the Midcontinent, kept price movement mixed. Losses ranged from 2-3 cents to half a dollar or so and were largest at Northeast citygates.

Friday’s drop of 3.3 cents by March futures was another bearish note for Tuesday’s cash market, while the return of industrial load from a long weekend obviously had little if any price-boosting effect.

Cold weather-related pipeline constraints are starting to reappear (see Transportation Notes), but not nearly as many as in the last few weeks. Northern Natural Gas will implement a System Overrun Limitation in all market areas Wednesday, saying its system-weighted average temperature is projected to be around nine degrees that day, rising to 10 Thursday and 15 Friday.

The South will be chillier than in the previous week, with some locations such as Nashville, TN, and Little Rock, AR, predicted to see bottom-end temperatures in the mid 30s Wednesday, but in other areas such as New Orleans and Houston mild highs in the mid 70s are forecast.

Except for Chicago, Midwest citygates saw sizeable declines of 20 cents or more despite The Weather Channel (TWC) saying “blizzard or near-blizzard conditions could develop in areas south and southeast of Lakes Superior and Michigan as [Wednesday] wears on.”

A winter storm churning through the Great Lakes region will push snow and sleet into the Northeastern Wednesday, TWC said, but in much of the region the snow will change rapidly to rain. The forecasting service expects mostly moderate conditions in the West except for the northern mountain areas.

A Gulf Coast marketer noted that she and quite a few others in the industry had worked on the Presidents’ Day holiday. There was no gas to be traded, “but we all stayed plenty busy” working on special projects or catching up on paperwork, she said.

The marketer said she couldn’t help but wonder what people were doing at Carthage Hub if they have index-based deals there and the index isn’t being published. The DCP Midstream processing plant at the hub remains shut down and the point continues to be very thinly traded following the rupture of a still-undetermined pipeline near the plant last Wednesday (see Daily GPI, Feb. 17). The marketer said one counterparty told her he was considering using ICE’s CenterPoint South average as a substitute for a Carthage Hub index, but she didn’t know if he actually did so.

The marketer was unable to think of any reason to expect a cash rally this week, especially after the screen fell just shy of a quarter Tuesday. It will get colder, she acknowledged, but she didn’t think it would get cold enough to overcome the general bearishness in both futures and cash markets. As last week’s Energy Information Administration report indicated, there’s still plenty of gas in storage, she said, and people will probably use a lot of it in this week’s cold weather instead of buying spot gas.

A Midcontinent producer said he noticed NGPL-TexOK start a rapid rise Tuesday morning and tried hard to buy gas near the low end before it was too late but had trouble logging onto ICE. Oklahoma intrastate pipeline Enogex seemed to have the relatively strongest pricing in the Midcontinent market, he said. Like the marketer, the producer he also does not expect a cash price rally this week, especially not after oil and gas futures and the Dow Jones Industrial Average fell so hard Tuesday.

The National Weather Service (NWS) predicts above-normal temperatures during the Feb. 23-27 workweek everywhere east and south of a line running southwestward from southeast Michigan to southern Missouri, where it turns due west through southern Kansas and southern Colorado to include the southeast corner of Utah and the eastern half of Arizona. NWS expects below-normal readings from the Pacific Northwest to as far east as the western Dakotas and to as far south as southeastern California.

The number of drilling rigs seeking natural gas in the U.S. plunged by another 50 to 1,054 during the week ending Feb. 13, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). Four rigs quit the search in the Gulf of Mexico and the onshore tally dropped by 46, Baker Hughes said. Its latest total is down 15% from a month earlier and 26% less than the year-ago level.

Notably, gas rig activity in the Gulf of Mexico is up 6% from a year ago, Baker Hughes said, although it is down 11% from the count during the week ending Jan. 16.

Analysts with SunTrust Robinson Humphrey/the Gerdes Group commented that the gas rig count has plummeted by 181 over the past four weeks and is now about 35% below its September peak. “We anticipate the gas rig count will shed another 200-300 rigs over the next couple of months before leveling off around ±800 rigs this summer,” they said. “Notably, the horizontal rig count, a gauge for resource play activity, fell 21 rigs (4%) last week to 497 rigs, the lowest level since last April.”

Stephen Smith of Stephen Smith Energy Associates is projecting that a 44 Bcf storage withdrawal will be reported for the week ending Feb. 13. That represents a large reduction from his original estimate of 60 Bcf.

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