Thursday’s explosion of prices in which gains ranged from about 30 cents to 90 cents (Algonquin citygate) left quite a few traders befuddled and groping for an explanation. Several were able to offer suggestions about potential contributing factors, but added that they didn’t believe their suggestion alone rationalized the big gains. “Beats me” was the essence of most answers.

Northeast citygates topped out at more than $8, while several Midwest citygates and Gulf Coast points were scaling the $7 peak.

Although there was some naysaying on the subject, it appeared that the weather moderation anticipated from midweek onward wasn’t turning out to be quite the price depressant some had thought. Low temperatures were staying in the vicinity of freezing and accompanied by snow from the Northeast through the Midwest and even down into the Mid-South. And the Northeast could expect such conditions to continue through the weekend, according to The Weather Channel.

But a New England utility buyer declared there “really is no good reason for such price strength.” Yes, her region is getting snow, “but it’s just flurries, not that big a deal,” she said. The buyer reporting hearing that a government agency or some private forecaster had called for “a very cold” January, but said that didn’t explain why prices would be running up so much two weeks in advance. “There seems to be something out there [in the market] that gas buyers can’t control,” she went on. “With prices like these, I may just ride my storage for a while.”

Speaking of storage, the Energy Information Administration reported a withdrawal of 134 Bcf last week, which was a little toward the high end but comfortably within the range of prior expectation. The screen stayed in negative territory for a good while after EIA’s announcement, but then began an afternoon climb that deposited it a little more than 15 cents higher on the day. Bullishness also was the theme in the rest of the energy futures complex, with crude oil for January padding its position above $33/bbl and hinting at making an assault on $34 Friday.

“While the report is considered bullish, prices have only been higher once in December,” observed Citigroup analyst Kyle Cooper. “Our view of this report would be much different if prices were at $5 or $6. But they are not. Prices are above $7 and we are simply unsure how much of the possible resurgence in industrial demand will remain. We have heard from a number of sources that many industrials are looking for alternatives to natural gas in January.”

A western marketer had a cautionary note about Thursday’s big gains, quoting retreats of a dime or more in late deals at Waha and Transwestern-Permian. Waha gas was not finding much demand from intrastate Texas generators because the state’s weather is too mild right now, she said. One possibility behind Thursday’s run-up is that December swing numbers are quite a ways behind January pricing, she said. As an example, she said her company is seeing Waha in the mid $6.70s for January, or about 35 cents above current prices.

To a Canadian producer, the cash spikes were mainly a case of “trying to catch up with Nymex,” which has now advanced twice in a row after beginning the week with two straight declines. However, a couple of other sources failed to see any significant screen support for the cash market, pointing out that Thursday’s rise occurred well after spot trading had closed out for the day.

Sonat and Florida Gas Transmission’s Zones 2 and 3 were especially strong in the Gulf Coast as both pipelines kept an OFO or similar restriction going. All three points traded solidly above $7. A Florid utility buyer said northern sections of the state might get below freezing Thursday night for the first time since last winter. Florida is supposed to stay fairly cold through the weekend, he said. “I’ve got no idea why cash so strong today,” but maybe it’s another case of lack of liquidity magnifying the effects of price volatility, the buyer added.

“I don’t know about tomorrow [Friday],” commented a Gulf Coast producer. “Every day has been the same; no matter what happens, the [futures] contract trades up when cash is done. Then it gaps down the next day.” Eventually some warmth will be coming to the Northeast, he said, “so I don’t know how much longer technicals can keep these prices up.”

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