Weekly cash prices gained ground early in the week amid regional blasts of cold and finished strong on Friday following a blizzard in the Upper Midwest, with rain and snow pushing to the East. The one-two punch was enough to keep cash prices in positive territory for the full week.

EIA storage for week ending Jan. 8

NGIs Weekly Spot Gas National Avg. for the Jan. 11-15 period climbed 10.5 cents to $2.820, led by hubs in the Northeast. As the trading week closed, Tenn Zone 6 200L was up 73.0 cents to $4.220 and Dracut was ahead 49.5 cents to $4.175.

Elsewhere, Henry Hub finished up 6.5 cents to $2.750, while Enable East gained 9.0 cents to $2.625.

Generally comfortable conditions across most regions of the Lower 48 were expected for the third week of January, minimizing the odds of strong national heating demand. The final week of January, however, holds promise for intense cold settling in over the Northwest and Plains before moving east. This could result in several days of freezing temperatures over large swaths of the country.

“We view the Jan 26-29 period as one of the best chances this winter for cold to finally come through,” NatGasWeather said Friday.

Meteorologists are anticipating a polar vortex – a cold snap that develops in the atmosphere above the North Pole and sends harsh blasts of freezing temperatures throughout the Northern Hemisphere. Should this develop, it could drop temperatures in Europe and Asia, as well, adding to already strong demand for U.S. liquefied natural gas (LNG).

This could put further upward pressure on domestic gas prices.

Though views on its intensity varied during the latest covered week, a polar vortex-induced chill is likely to develop in the western and central United States, forecasters said, and this type of pattern historically has proven capable of driving Arctic cold across the East and as far south as Texas.

February Futures

Natural gas futures yo-yoed throughout the week, as traders tried to balance bearish weather trends against continued strong LNG demand and a bullish storage report from the U.S. Energy Information Administration (EIA).

Futures rallied early in the week after meteorologists predicted the severe and sustained winter freeze that could blanket large swaths of the Lower 48 late in January.   

Futures, however, lost ground Wednesday and Thursday as weather models shifted warmer. Forecasts continued to show cold blasts late in January but the duration and reach of the freezing temperatures was scaled back, with uncertainty about cold Canadian air pushing out of the central United States into the East and South.  

By Friday, however, forecasts tilted back to stronger expectations for severe winter conditions and robust heating demand by late January, boosting futures in the week’s final day of trading by 7.1 cents.

The February Nymex contract settled at $2.737/MMBtu on Friday, up 1.4% from the prior week’s finish.

Despite mixed forecasts throughout the week, “we believe the colder picture can progress forward,” with both the American and European models pointing to the coldest temperatures of the season ahead, Bespoke Weather Services said.

Bullish trends elsewhere helped fuel positive sentiment during the week. EIA on Thursday reported a withdrawal of 134 Bcf from natural gas storage for the week ended Jan. 8, eclipsing both the year-earlier pull and the midpoint of analysts’ estimates.

A Bloomberg survey ahead of the EIA report found a median estimate of 129 Bcf decrease. NGI modeled a 130 Bcf withdrawal, equal to the pull reported for the week ended Jan. 1. EIA recorded a 91 Bcf withdrawal for the comparable year-ago period.

Strong and steady U.S. LNG export levels during the covered week provided added demand. LNG volumes, boosted by robust north Asia demand amid brutal winter conditions, hovered above 11 Bcf and near record levels most of the EIA covered period, NGI data showed.

LNG volumes declined modestly during the week ended Jan. 15 but finished the week back above 11 Bcf on Friday, near historic highs.

“The record-breaking start to the year continues as both the LNG and shipping markets gain strength,” shipbroker Fearnleys AS said in a note, adding that it expects the market to remain tight through the winter. 

Friday Cash Cruises

Spot gas prices advanced Friday after a bout of harsh winter weather in the upper reaches of the central United States. NGI’s Spot Gas National Avg. finished the day up 10.5 cents to $2.845.

Blizzard conditions blanketed much of the Upper Midwest late Thursday and into Friday, and forecasters said the weather system, bringing both rain and snow, was expected to extend from the Great Lakes to portions of the East over the weekend.

Prices in the Northeast surged Friday and led the overall gains. Algonquin Citygate spiked $2.185 day/day to average $5.205 and PNGTS jumped 79.5 cents to $4.990.

Price gains generally were much more modest in other regions. In the Rocky Mountains, CIG picked up 5.5 cents to $2.635, while in Appalachia, Columbia Gas gained 5.0 cents to $2.580.

Out West, there were a few hubs that lost ground. SoCal Citygate shed 12.5 cents to $3.260, while El Paso S. Mainline/N. Baja dropped 6.0 cents to $2.830.

Friday’s overall gains aside, looking ahead to the third week of January, temperatures were expected to be above normal outside of the northern Plains and interior West, NatGasWeather said Friday. “With high pressure ruling most of the rest of the United States,” national heating degree days “will be much lighter than normal.”