Rockies points abandoned their contrarian softness tendency from the day before and joined the overall market in across-the-board price gains Tuesday in response to wintry weather engulfing most of the U.S. and Canada. Once again the icy Northeast led the upward charge with varied gains ranging from about a quarter (Texas Eastern M-3) to more than a dollar (Tennessee Zone 6). Otherwise, increases ran from a nickel to a little more than a quarter.

The surging weather load fooled bearish types who had suspected Monday that storage use by buyers balking at this week’s run-up would place an effective cap on further large gains. However, they may have realized some vindication Tuesday from sharp drops in late trading in the hugely volatile Northeast citygate market. Transco Zone 6-New York City, although only up 20 cents on average, pushed to both a higher $7-plus peak and a lower $5.20 bottom in comparison to the previous day.

Although the cash bulls prevailed Tuesday, once again traders had mixed feelings on whether the market can continue moving upward. One cited Tuesday’s late retreats, which were especially pronounced in the Northeast, along with the screen’s drop of nearly a dime in predicting that this week’s price surge had peaked for most points. It will stay pretty cold for another couple of days, he said, but he expects enough companies to call on storage and LNG stashes to stanch further gains rather than continue buying at $4-6 or so-plus. However, the trader did concede it remained “a toss-up” on whether the price run-ups will continue Wednesday.

A Midwest trader was in general agreement, saying that “with the Nymex off and Access printing lower as we speak, this week’s bullish streak is pretty much ending today [Tuesday].” However, he didn’t expect much weakness, saying, “It’s still too cold for that. I think we’ll still see $4-plus gas Wednesday in the Midcontinent/Midwest.” EIA’s Thursday morning storage report will play a big part in determining the direction of the late-week market, the trader added.

A couple of sources seeing potential for even higher prices pointed to colder western weather spreading into the Pacific Northwest Tuesday and predictions of a major ice storm hitting much of the Southeast over the next day or two, adding to already abundant snowy and frigid conditions in the Northeast and Midwest.

Analysts Thomas Driscoll with Lehman Brothers and Kyle Cooper with Salomon Smith Barney weighed in with fairly similar forecasts of storage withdrawals of “roughly” 95 Bcf and 89-99 Bcf respectively. That would compare with a year-ago injection of 4 Bcf, Driscoll said.

One Northeast LDC illustrated the resistance to regional prices above $6. Although acknowledging that “it’s awfully cold,” the utility’s gas buyer had no new purchases to report Tuesday, saying the company would ride out the storm by dipping into a reserve tank of LNG. “We had lots of calls from people looking to buy gas from us,” she said, but rather than sell to them the distributor decided to make sure it had enough gas on hand to keep ratepayers warm.

One of the few low-demand areas remaining is Florida, where a trader reporting citygates in the $4.40s said the state was experiencing “that in-between weather with highs in the low 70s, so nobody needs gas for either heating or cooling.” He and another source said they were unaware Tuesday afternoon of any Florida Gas Transmission Zone 1 cutbacks in deliveries from MOPS, which began a pig run Tuesday that MOPS had warned last week could impact up to 100,000 MMBtu/d if excessive liquids were encountered (see Daily GPI, Nov. 26).

“When the market goes berserk, you can have your head handed to you if you are caught off guard,” said a trader referring to the continuing price spikes at Northeast citygates. “But if you remain calm, you should be able to ride out the wave, and soon enough prices stabilize.”

A Calgary marketer said that after a run of unseasonably mild temperatures in late November, his area is now “freezing at around 20 degrees F.” His average Sumas price of $4.00 was slightly less than 15 cents under the PG&E citygate, a spread that he called “a little too close for my liking” but which was reasonable considering the frigid conditions in Western Canada and the Pacific Northwest.

Nymex weakness may have limited intra-Alberta gains to less than C30 cents, another source speculated.

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