Screen, Storage Buying Keep Cash Rises Going

Although it was getting chillier Friday in major northern market areas, traders agreed the weather wasn't severe enough to justify further strong jumps in cash prices. Rather, they said, it was continued muscle-flexing by the screen along with a fresh spurt of buying for storage that produced price gains ranging from about a dime to a quarter at all but a few points.

Cash is still very weak relative to futures, a couple of traders told Daily GPI (Henry Hub in the low to mid $4.60s Friday was about 30 cents below the screen closing). Because of that, "it makes sense to inject as much storage as possible before cash is able to play catch-up," said a marketer in the Midcontinent/Midwest market. "We're dumping a boatload into storage for the weekend."

Predictions of cold weather going into the weekend for the Midwest and Northeast were somewhat exaggerated, but low temperatures around freezing are projected for early this week. There's no doubt many traders looked ahead to that kind of demand, one trader said.

Transwestern-West Texas was a rare point able to advance only in single digits, rising only about a nickel. The backup of gas caused by Transwestern's closing a San Juan Basin section due to a train derailment near the mainline didn't appear to be hurting prices much earlier in the week, a marketer said, but they must have been somewhat repressed when the pipeline extended a force majeure and capacity constraint through at least Saturday (see Transportation Notes).

Intra-Alberta numbers participated in the overall bull market despite a continuing maintenance bottleneck at the ABC (Alberta/British Columbia) border. Once again a rising futures contract helped counteract the capacity constraint, a Calgary trader said. The Sumas-domestic price spread on Northwest didn't widen any further as both points registered similar upticks. But Sumas, although spiking sharply toward the end of Friday trading, is primed for a big downturn today because the ABC constraint should be over by then, the trader said.

A key supporting element of the current cash firmness is that a sequence of cold-weather patterns is starting to build, said a Houston-based marketer. After the one due early this week, another one looks likely in the 11- to 15-day forecasts, he added. The big question about cold snaps supporting gas prices is their durability, the marketer said; they need to hang around four to six days each time to keep the bull market going, but often last three days or less.

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