Severe winter weather, having already arrived in the West and predicted to engulf much of the rest of the U.S. by the end of the week, sparked rising prices at a solid majority of points Monday. The Midcontinent and West regions, which had recorded all of the preceding Wednesday's dollar-plus plunges, also saw all of the Monday rally's triple-digit gains that ranged as high as about $1.80.
A few flat to moderately lower numbers were scattered across the Northeast, Gulf Coast and Midwest markets.
The return of industrial load following the extra decline associated with a four-day holiday weekend also played a role in supporting cash prices.
The physical market Monday had no prior-day futures backing since Nymex's December natural gas contract had fallen 27 cents Wednesday (Nov. 22) on the first day of its three-day countdown to settlement. However, in their next-to-last day of trading Monday, December futures were up 28 cents, which should give cash gas a leg up in attempting further increases Tuesday.
Snowy weather was widespread in the West Monday and more of the same was predicted for the region Tuesday. Much of the Midwest also will be getting a taste of a return to severe mid-winter conditions. Relatively moderate conditions will continue to prevail for another day or two in the South and Northeast, but those areas will be feeling the cold again toward Thursday and Friday as the western storm system continues to move eastward. Of course, for northern New England "moderate" in late November still means highs in the 30s, according to The Weather Channel, so it's not like heating load ever went away in that section of the country.
Besides heavy heating load, supply issues were part of the West's major price advances. Northwest will implement entitlements Wednesday and Thursday for customers on the north end of its system because of severe cold weather in its market area and what it called "record low throughput volumes across the Canadian border" (see Transportation Notes). There was no argument for that, with Calgary expected to see a low of minus 24 degrees F Monday.
In addition, Kern River said linepack had dropped to low levels in the three farthest downstream of its four system segments, and Westcoast continued to discourage drafting of its system by setting an imbalance tolerance range of 20% pack/zero draft.
Presumably daily spot prices should be getting stronger Tuesday as the winter storm in the West keeps moving toward markets in the Midwest/Midcontinent and East, but you never can tell because the market doesn't always act logically, a Gulf Coast producer said.
Usually rising futures numbers like Monday's gain at Nymex tend to mean weaker basis as bidweek goes along, but not so this time, the producer continued. He saw December basis actually get a little stronger compared to pre-holiday weekend levels, and reported basis for Transco Station 85 at plus 32 cents and for Transco Station 65 at a range of plus 22-24 cents.
A Midwestern marketer said fixed prices for December also moved a little higher, with staffers telling him their quotes were up a dime or so from where they traded prior to Thanksgiving weekend. Presumably that was a result of the early show of strength Monday by December futures, he said.
Citigroup analyst Tim Evans is looking for a 25-35 Bcf storage withdrawal to be reported for the week ending Nov. 24.
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