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Northeast Still on Rise, Rest of Market Still Falling

Northeast Still on Rise, Rest of Market Still Falling

Northeast citygates were peaking above $10 again Friday as the region entered another period of intense cold. But other than Northeast upticks ranging from a little less than 20 cents to about $1.80, gains were few and far between in the rest of the market. Most points fell from about a nickel to a quarter.

Traders cited the previous day's bearish storage report and related screen dive, lighter weekend industrial load, and the persistent lack of major heating load outside the Midwest, Northeast and Rockies as factors in Friday's softness.

A Gulf Coast marketer reported seeing a mild upward trend for most of the morning and then a little tailing off near end, "but nothing major" in either direction. After a storage report featuring a withdrawal that fell short of nearly all expectations, he was rather surprised that Friday's production-area softness wasn't greater.

Observing that spreads from the Gulf Coast to the Northeast had widened to $3-4 or more again, one source said that as a result of FERC's Order 637 implementation, new segments of long-haul transportation capable of being bumped had developed. "That means that some who were able to get their gas through last year during periods of tight capacity [like the current one] are not able to do so now" in some cases, he said. It's kind of like hunt-and-peck typing for transporters in finding out what works and what doesn't work now, the source went on. He discerned some support for Northeast prices last week from a lot of shippers having to work off negative imbalances that they had accrued a week earlier.

Another Northeast trader exclaimed, "I know why New York is up [nearly] a dollar. It's cold up here! We're looking at lows in the teens and highs below freezing for the next few days. And it's a good thing that the coldest day was [to be] on Saturday when the load is lighter. If those temperatures came on Monday, we would really see some price spikes." He noted that the screen had provided a launching pad for potentially higher cash numbers by rebounding more than 20 cents Friday, adding, "I expected the Nymex to tumble down a little more after Thursday's big drop, but the sell-off didn't last."

However, a Calgary-based producer didn't have a lot of sympathy for the cold-weather trials of those in the eastern U.S. and Canada. "I think New York is not so bad," she said. "We're going to see minus 31 Celsius Monday night. That's some cold weather."

Although such forecasts have sometimes proven false in recent weeks, there are indications that more widespread cold could bolster the cash market over the next few days. The South and much of the West escaped the brunt of last week's worst weather, but their turn is approaching, according to The Weather Channel. "Late in the coming week, the coldest air of the winter season so far will target the Deep South as a big block of arctic air surges southward via the central states," TWC said Friday. It added that the West would be colder overall over the weekend and through this week, with a new storm moving from the Pacific Northwest through the Rockies Monday through Wednesday "with yet another to follow for late week."

Such an extension of demand-raising weather would only add to that already in the Midwest and Northeast, which are expected to see little change from freezing conditions this week.

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