Physical gas prices Wednesday gained on average by 11 cents overall, but if the volatile East is included, the rise was just under 18 cents. Gains were widespread with only a handful of points recording losses.

New England points surged as weather forecasts called for storminess followed by cold to rake the area Thursday into Friday. Futures traders are on the lookout for the biggest storage pulls of the season. At the close March futures had risen 7.7 cents to $3.335 and April had added 7.6 cents to $3.385. March crude oil gained 37 cents to $97.94/bbl.

It seems that anytime constrained New England pipelines get a whiff of cold air in the forecast, temperatures lose no time jumping higher. The National Weather Service in southeast Massachusetts was looking for rainstorms to march through the area, followed by plunging temperatures.

“[S]trong to damaging winds are anticipated late tonight into middle morning Thursday…along with a band of heavy rain showers. The front will push across the region Thursday morning…bringing with more windy conditions and colder temperatures. A couple of relatively fast-moving systems may produce light snow on Sunday and again on Tuesday of next week.”

Forecaster predicted that the high in Boston Wednesday of 58 would recede slightly to 57 on Thursday before dropping to 36 on Friday. New York City’s high of 61 on Wednesday was expected to slide to 50 on Thursday before plunging to 39 on Friday.

Quotes at the Algonquin Citygates for Thursday delivery gained $2.82 to $7.42, and deliveries on Tennessee Zone 6 200 L rose $2.86 to $7.31. Parcels into Iroquois Waddington added a stout $1.02 to $4.54.

Gains at other eastern points were more muted. Dominion saw a rise of about 16 cents to $3.28, and on Tetco M-3 next-day gas went for $3.55, up 20 cents. Gas bound for New York City on Transco Zone 6 rose 52 cents to $3.99.

Marketers in the Great Lakes were squaring volumes for the end of the month but were able to keep their spot prices below January index. “Last week we had to adjust for the cold snap later in the month, but after we averaged it out, our spot purchases did come in less than index. That did work well,” said a Michigan trader.

“We bought gas on Michcon and Consumers Wednesday and had to pay about 11 cents more than Tuesday, but we had to finish out the month. We bought gas on Michcon at $3.50 and Consumers at $3.51.”

The trader hinted that his company might go a little light on bidweek volumes since “We are seeing some warmer weather in February. The gas we bought based on [February Nymex] settlement looked a lot better than what we paid today. We paid about $3.60 based on January settlement, but we are coming in at $3.446 for February. We pay 22 cents over settlement on Consumers and 19.5 cents on Michcon. February is getting off to a good start.”

He added that storage volumes also entered into the mix, and “for the past couple of years the price in January has been lower than the summer.”

Next-day gas at Dawn gained about 8 cents to $3.53, and quotes on Michcon rose by 15 cents to $3.49. Deliveries on Consumers were higher by 13 cents to $3.49, and at the Chicago Citygates, next-day parcels rose 21 cents to $3.54. On Alliance Thursday deliveries added 15 cents to $3.49.

Futures traders thought the day’s gains may have been in anticipation of the heaviest storage withdrawal seen yet this season. “Everybody is going to be looking to see what the [storage] number brings. Underneath here there is support at $3.25, but if the market breaks that you could easily see $3,” said a New York floor trader. “Traders are saying they don’t think that is going to happen. They are looking for the market to trade up to the $3.50 range.”

If estimates of Thursday’s Energy Information Administration storage report are correct, the deficit relative to last year should expand and the surplus compared to the five-year average should narrow. Analysts at Citi Futures Perspective forecast at withdrawal of 208 Bcf, and a Reuters poll revealed an average of a 206 Bcf pull. Ritterbusch and Associates calculates a decline of 207 Bcf. Last year 149 Bcf was withdrawn and the five-year average is 178 Bcf.

Ritterbusch said in closing comments Wednesday that he expected a pull of 210 Bcf or more was necessary for prices to continue Wednesday’s advance.

Forecasters see a slight bias to the warm side, but overall few changes. WSI Corp. in its six- to 10-day outlook says, “Today’s [Wednesday’s] forecast is slightly warmer than yesterday’s outlook in the central U.S. while somewhat cooler in the West. However, there are few significant changes.

“Confidence is near to above average in the six-10 day forecast. Despite some technical differences, there is good large-scale model agreement. Temperatures may run warmer than forecast across the Deep South by mid-late next week as a trough is forecast by all models to drive into the western U.S. while ridging previously over this area builds eastward.”

Followers of Elliott Wave and Retracement see a bearish tone to the market. Brian LaRose, a technical analyst with United ICAP, however, identifies two minor concerns for the bearish case. “Key support is just below and the intraday RSI is sitting in oversold territory.” He believes that these two factors are not enough to warrant calling for a market bottom.

“Assuming the bears can push natgas below $3.177-3.138, we will be looking for a further decline to $2.762-2.678 (“a”=”c”) from here,” he said in closing comments to clients. LaRose points out that an average seasonal decline of 42% would take spot futures down to $2.281.

In a blog for RBN Energy Mike Patterson of RenRe Energy Advisors contends that season ending inventories are not likely to be much different than last year. Time is running out to make much of an impact of the remaining burdensome storage levels.

“Historically, the actual March 31 levels span a range of 600-2,500 Bcf. In contrast, our simulated levels span a range of just 1,700 Bcf to 2,400 Bcf. The latter range is much smaller than the former, illustrating again that there’s just not much time left in the season for a lot of variability. If the weather were to repeat the coldest season-ending months from our 15 year sample we would only get down to 1,700 Bcf. If this year ends like several of the warmer season-ending months, we’ll be closer to 2,400 Bcf. Consequently, our simulated March 31st levels are roughly 400-1,100 Bcf above normal.”

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