Triple-digit spikes at Northeast citygates led advances at nearly all points in last Friday’s trading for the first two days of January. The coldest and most widespread frigid weather of the winter season so far is expected to be in place in most of the U.S. and Canada as the new year begins.

Thursday’s expiration-day gain of 12.6 cents by January futures lent a bit of supplementary support to the cash market Friday.

Flat numbers or small losses at three western points prevented an across the board run of firmness. Gains ranged from about a nickel to $5.15, with Transco’s Zone 6-New York City pool racking up the biggest increase by far. The NYC point also recorded the day’s top quote of $16.50.

Traders at Transco’s market-area points must have anticipated tight supplies. It wasn’t posted until after cash market activity was finished, but Transco will implement an Imbalance OFO Wednesday in response to anticipated heavy demand and maintenance constraints on its system (see Transportation Notes). In addition, although they only warned of possible OFOs, Spectra Energy pipes Texas Eastern and Algonquin said they would begin restricting creation of due-pipe imbalances and resolution of due-shipper imbalances Tuesday.

The Energy Information Administration handily exceeded prior expectations of a storage pull in the 140s Bcf when it reported a 165 Bcf withdrawal for the week ending Dec. 21. Nymex traders seemed to have a delayed reaction to the report’s apparent bullishness, limiting an advance of the new prompt-month February futures to a nickel or so for much of the day before finally sending the contract to an 18.6-cent gain at $7.386.

Due to what it called a “modest Labrador Blocking,” the upcoming polar air mass that will turn nearly all of the U.S. and Canada into a deep freeze at the advent of 2008 will have the most southern penetration that has been seen yet this season, Weather 2000 said Friday. “With the polar front sweeping down even past the Gulf of Mexico, the Gulf Coast states should expect multiple nights falling below the freezing mark, with the frost line briefly extending down to the interior sections of southern Florida,” the New York City-based consulting firm said.

However, the weather will turn increasingly bearish for gas prices after midweek, according to the National Weather Service (NWS). In its six- to 10-day forecast posted Thursday afternoon for the Jan. 2-6 period, the agency forecasts that above-normal temperatures will have spread to everywhere west of a line running northeastward from southeast Louisiana to New York’s eastern border. NWS looks for below-normal readings only in Florida, the southeast corner of Alabama and the southern halves of Georgia and South Carolina.

Florida has actually had a small amount of cooling load recently because it’s been so warm in South Florida, said a utility buyer in the Sunshine State. It will join the rest of the country in experiencing very cold conditions in the coming week, though, he added. Prices for Jan. 1-2 started rather weakly Friday, then rallied something like 40-50 cents as buyers started coming out of the woodwork, he said, noting that Henry Hub started below $7 but eventually got as high as $7.33.

The January bidweek seemed “choppy” with two limited-trade holiday periods included, the buyer continued. January prices got stronger as bidweek went on, he said. His company only needed a little baseload; normally it tries to buy out of Florida Gas Zone 1, but numbers there were stronger than expected, “so we didn’t touch that,” he said.

A Calgary-based producer who reported first-of January spot prices for NOVA Inventory Transfer up about a dime said it appeared to be a straightforward bidweek, but his company did almost all January trading between Dec. 17 and Dec. 21, prior to the final five business days of the month. Most people didn’t want to wait until after Christmas because they knew that not many trading counterparties would be available, he said.

A light snow was falling Friday in his area, a Midwest utility buyer said. His company already had a long supply position for Jan. 1, so he made one-day purchases for the 2nd only. He noted that a “big warm-up” is due after the middle of this week. Like others, he did his January baseload shopping early, saying he had wrapped up 99% of the deals before the long Christmas weekend. January supply was readily available, he added.

A Midcontinent producer reported hearing that Enogex-West prices were softening from the levels negotiated in term winter deals that were done back in the fall. “This is usually a very strong pipe, but more so in the summer,” he said.

He saw a bullish sign in January futures being able to eke out gains in the last two days of the three-day settlement period, saying, “We should definitely hold $7.” The weather forecast is still bearish in the early part of January but that could change, he said, adding, “Some local guys think we’ll see some colder temps.”

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