With futures guidance having turned neutral Tuesday, spreading cold weather not yet getting very severe, and something of a feeling that the cash market spikes of the previous two days might have been overly exuberant, prices fell at most points Wednesday.

Several locations, primarily in the snowy Rockies, were able to sustain this week’s rally into a third day with gains running as high as about half a dollar. Otherwise, Wednesday’s price movement ranged from essentially flat to down a little more than 30 cents.

However, the screen must have gotten its second wind after a close-to-flat performance Tuesday, as it rebounded by 36.5 cents Wednesday. That and the fact that temperatures would be getting lower and occupying a more widespread area Friday led a couple of traders to agree that the overall cash market is expected to rally Thursday.

One source pointed out that the cold front that had already invaded the Midwest, Central Plains and Midcontinent will be snuffing out the air conditioning load that had returned to the western end of the South after last week’s brief siege of chill. For example, he noted, the high for Little Rock, AR is predicted to drop from the mid 80s Wednesday to the mid 60s Thursday. And Houston, which was expected to peak just below 90 degrees Wednesday, has a Thursday high forecast in the mid 70s. However, there will still be a bit of cooling demand in the eastern South, where Atlanta and Charlotte, NC are predicted to see highs around 80 Thursday.

Besides lows near freezing and mountain snowfall, Rockies quotes were supported somewhat by a modest lack of supply. Kern River reported low linepack in its three farthest downstream segments Wednesday and asked shippers to refrain from drafting the pipeline.

On the other hand, projecting that its California Gas Transmission system linepack would rise to well above maximum target levels by Saturday, PG&E extended a systemwide Stage 3 high-inventory OFO through at least Thursday. Although Malin and the PG&E citygate had resisted the negative impact of Wednesday’s OFO by rising 96 cents and 85 cents respectively Tuesday, this time they reacted by falling nearly 20 cents and about 30 cents.

Henry Hub, which had closed its deficit to November futures to about 18 cents Tuesday, made convergence a little tougher again by widening the gap to about 75 cents Wednesday.

A Texas-based marketer said yes, he expects quotes for physical gas to be higher Thursday. Not only does the cash market have renewed prior-day screen support, but heating load will be growing Thursday and Friday from the Midwest through the western South, he noted. It will take a while longer for the cold front to reach the Northeast and the eastern South, but buyers in those areas likely will be making bigger purchases for Friday flow, he added.

Also, prices were rising in late deals Wednesday, the marketer said, but since most gas had already been traded by then they had little effect on general market softness. However, late-morning price trends often indicate where the market is heading the next day. He noted that Henry Hub, which averaged in the mid to high $6.00s, was being bid at $6.40 and offered at $6.48 for the balance of the month.

It looks like those concerns about full storage causing prices to tank in October are being rendered moot now, the marketer continued. The predictions of virtually full storage are being fulfilled (see Daily GPI, Oct. 18), but colder temperatures than normal for mid-October are averting a price crash, he said. Most buyers are trying to preserve their storage for now, so few are withdrawing during the current cold spell, he said, adding that utilities are buying spot gas “consistently” in the Northeast and Midwest.

A Gulf Coast producer concurred that it looks like Wednesday’s screen rally will be to lift cash again Thursday. Wednesday’s trading was a bit more routine after two days of huge volatility and spiking prices, he said, but the oil product inventory reports that morning kind of put back some volatility into the cash gas market. Despite reports of lack of storage injection capacity, the producer said he was not yet running into any situations where buyers were refusing gas because their storage accounts are full.

Jim Osten of Global Insight expects a 53 Bcf storage injection to be reported for the week ending Oct. 13. Bentek Energy had a similar forecast of a 54 Bcf build. But Reuters news service said its survey of 23 industry players found a consensus prediction of 48 Bcf. Estimates ranged from 30 Bcf to 70 Bcf, Reuters said.

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