Prices continued to ride the crest of somewhat premature winter weather and strong futures to new gains Wednesday, but just barely in most cases. Rockies numbers increased by about 20-40 cents and Northeast citygates rose by 5-15 cents, but otherwise nearly all points ranged from flat to only about a nickel higher.

Cash was in a tight range and not volatile at all, a Gulf Coast producer said. Henry Hub stayed within plus-or-minus 5 cents of the day’s starting point, he added. “On the whole, it was a fairly mild day compared to the past couple of days.”

Wednesday’s market essentially was a case of the screen “following the cash” instead of the other way around, according to a daily market commentary from Williams Energy Trading and Marketing. “The forward markets were once again supported by the physical markets…The November natural gas contract was able to rally back to settle close to its highs, backed by forecasts of possible record cold temperatures making their way into the Plains and into the Northeast by the early to later part of next week,” Williams said. Even though it expects Thursday’s storage number of an expected 25-30 Bcf build to be viewed as bearish, the current six- to 10-day forecast “appears to be enough to hold prices at these levels.”

A utility buyer in the Northeast said EIA may report a small injection volume Thursday, but it shouldn’t be taken as bullish “because we’re already so close to full. We have little room left to inject anything.” He couldn’t see any possibility of a net withdrawal in next week’s report, as at least one industry analyst has suggested based on this week’s cold weather. “Anybody who thinks so is just trying to push up Nymex,” the buyer said. He added that no warmup is in sight for the Northeast until the end of this week at the earliest.

Another Northeast utility buyer had no prices to report, saying she was “a day late and a dollar short” in getting any deals done. “But it feels more like November or December weather to us instead of late October,” the buyer continued. “This cold is earlier than usual” in the season. She said the U.S. Climate Prediction Center is now forecasting December-February temperatures as being above normal from Northern California through the Midwest to the Northeast. However, she noted that “last winter they predicted cold and it turned out to be mild,” so she wondered if this year’s forecast might be inaccurate in the opposite direction.

Continuing the storage discussion, a marketer said, “We are about to hit the wall with our tariff’s restrictions on storage. Our capacity needs to be full by the end of October. Having to plan out when you can inject and how much can be a real chore.” And a producer chipped in: “We could see a small injection this week and a small one next week. The East is supposed to be full already. Right now we are almost 10% above the five-year average. A 30 Bcf injection would put us at 96% full. I wouldn’t be surprised if there was a small withdrawal in the East, with the cold weather and relative strength of cash to the screen this week.”

About 115 MMcf/d is off the South Texas market until further notice. That is how much was flowing on the offshore pipeline MOPS before a problem with excess liquids forced a shut-in of the entire system Wednesday (see Transportation Notes), a spokesman said.

A Midwest trader observed that there was still snow in the region Wednesday, but temperatures are due to get back to “the normal 50s and 60s by the weekend. He reported trying to do an NGPL Midcontinent deal in the low $4.10s, but said the spread to the Chicago citygate, which he quoted as barely more than 20 cents higher near the end of trading, “didn’t work for us.”

Although weather in much of the Rockies is relatively moderate for now, that market tended to record Wednesday’s biggest gains because of a snow-laden front moving into the region from the Upper Plains, a source suggested.

November business remains almost non-existent for many traders, but a Northeast source reported offering Iroquois Zone 2 basis of plus 54-55 cents. There’s a lot of convergence needed, though, since she had seen the same point being bid at plus 40 cents, the source said.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.