Both the cash and futures markets appeared to respond to influences in seemingly illogical ways Thursday. Despite strong prior-day screen support and spreading cold temperatures in northern market areas, cash prices fell at most points. And for the second Thursday in a row, prompt-month futures shrugged off an undeniably bearish storage report to post a strong gain.

A couple of sources suggested that with the start of withdrawal season having officially arrived, use of storage gas to meet current-burn needs in lieu of buying new spot supplies may have prompted Thursday’s overall losses.

A large majority of the cash market saw prices that were flat to down about 45 cents. The Rockies, where overnight lows are currently around freezing or less, recorded by far the largest of increases ranging from a little less than a nickel to nearly 85 cents.

In addition to substantive localized heating load, Rockies numbers may have benefited from the lifting of high-linepack OFOs by SoCalGas and PG&E. However, while the PG&E citygate was flat, the Southern California border continued to sink another 30 cents or so.

Florida Gas production-area zones and the Florida citygate dropped from a little more than a dime to a little more than a quarter in spite of Florida Gas Transmission issuing an Overage Alert Day (see Transportation Notes).

Nymex traders shrugged off a second straight well-above-expectations storage injection report and sent December futures soaring by 30.7 cents Thursday, nearly matching the previous day’s 30.9-cent spike. The Energy Information Administration estimated a 66 Bcf storage build for the week ending Oct. 26, which was within the range of prior estimates but exceeded consensus expectations in the high 50s Bcf. Explanations for why the screen rose instead of fell centered around the weak U.S. dollar, a developing cold wave in the eastern half of the U.S. and the financial community’s recognition of natural gas as being highly undervalued in relation to sky-high crude oil prices (see futures story).

Barring a highly unlikely drastic change of course, Tropical Storm Noel can be written off as largely insignificant to the gas market. The storm, which was moving through the Bahamas Thursday, remains on track to be dumping rain on the Canadian Maritimes provinces around Sunday morning, the National Hurricane Center said.

Temperatures remain relatively moderate in the South and much of the West outside the Rockies and Pacific Northwest. But a cold front that had chilled the Midwest and was about to do the same in the Northeast had forecasted lows for Friday dropping to about 40 degrees or less in most of both regions.

A marketer in the Upper Midwest said Consumers Energy is still curtailing deliveries into its system and it looked as if that will continue until at least Monday, when presumably some storage injection capacity might have been created in the Consumers facilities. Despite the continuing cuts, the Consumers Energy citygate recorded one of Thursday’s rare upticks of nearly a dime.

With local temperatures expected to drop into the upper 20s Thursday night, the marketer expressed some puzzlement over mostly lower spot prices. She said she could only speculate that storage withdrawals are starting to displace spot gas purchases to some degree. The Midwest is expected to stay very cold through the end of next week, she added, but then a return to above-normal temperatures is predicted.

A western trader said the West Coast is seeing normal to above-normal temperatures, but he was aware of much colder weather showing up in northern market areas and the Rockies. He expressed a bit of surprise that the Southern California border-PG&E citygate spread had grown as great as nearly 90 cents in November indexes, but his company had noticed the gap growing during bidweek. The spread was little changed in Thursday’s daily trading, he said.

The trader said he wouldn’t be surprised to see PG&E and SoCalGas reinstate OFOs for Saturday. PG&E is projecting that linepack will rise above its maximum target levels during the weekend, he said, and SoCalGas has an outage of one of its storage facilities that will last nearly two weeks (see Transportation Notes).

He added that he would have to agree that Thursday’s mostly softer prices likely were due to storage withdrawals getting under way.

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