Cash prices zoomed higher by a quarter or more at many eastern points Monday in what one source called a purely screen-led burst of bullishness. Western markets also rose, but by varying amounts; Rockies quotes saw gains on either side of a dime, while San Juan-Blanco joined a couple of Northeast citygates in recording the day’s biggest increases of nearly 40 cents. California, Permian/Waha and Pacific Northwest points tended to match the overall market by rising 20-30 cents.

“We’re pretty much following the board [futures] upward, because really bad weather hasn’t actually gotten here yet,” said a Midcontinent marketer. He pointed to the National Weather Service’s six- to 10-day forecast, issued Sunday, which called for below normal temperatures beginning Saturday across most of the eastern two-thirds of the U.S.

However, another source noted that winter storms or frigid conditions were being encountered Monday in most of the northern half of the U.S. and in eastern Canada. Much of the Northeast was recovering from weekend ice storms that left thousands still without electricity Monday. However, a utility buyer said the region, though still frigid Monday, would see about three days of a warming trend before turning colder again Friday.

The Midcontinent marketer said the gas futures spike was accompanied by new strength in the crude oil and heating oil contracts as many traders believe that Saddam Hussein is unlikely to cooperate with the U.N. weapons inspectors arriving in Iraq and will commit the “material breach” that could trigger war with the U.S. He also said that besides the screen influence on the cash market, prices also got support from the resumption of industrial demand coming out of the weekend.

The marketer thought cash was “not all that strong against the screen” Monday, though, saying that otherwise Panhandle Eastern would have been trading considerably higher than the $3.90 area that he saw. “We’ll find out how much they really want the gas when it comes time to trade for the weekend and weather will be getting much colder than now,” he added.

A Florida buyer quoting citygates in the mid $4.40s commented that it was nice to get an extended break from Overage Alert Day notices. Florida Gas Transmission has not issued a new OAD, which were nearly constant from last spring until a couple of weeks ago, since ending the most recent one last Wednesday.

One trader reported next-day intra-Alberta numbers up by about C40 cents into the mid C$5.30s. A Calgary-based producer said there was virtually nothing besides the futures influence to explain the Aeco run-up, since area temperatures were about 13 degrees C. Monday (mid 50s F.) and would stay relatively mild all week. She noted that historically, “about a week after Western Canada gets warmer weather, it shows up in the East.”

A Gulf Coast trader expects Monday’s price strength, which he attributed to a combination of screen influence and weather fundamentals, to continue for a while longer. “There were a lot of active buyers even at these high [price] levels,” he said. Some people were talking about Monday’s rebound being a delayed reaction to EIA’s storage report Thursday, he added, “but I think they’re just using that as a ‘convenient’ rationalization of today’s gains.”

Speaking of the EIA report, analysts were making their weekly predictions. Thomas Driscoll of Lehman Brothers is looking for a withdrawal of about 25 Bcf, which would compare with a year-ago injection of 33 Bcf. He said he added an allowance of 5 Bcf to the estimate because of last week’s withdrawal volume of 48 Bcf (which exceeded Driscoll’s prior guess by 38 Bcf) “just in case last week’s strong withdrawal is the beginning of a trend.” Meanwhile, Kyle Cooper of Salomon Smith Barney had a quite different outlook, seeing little change in inventories. “Our official estimation will call for something between a draw of 3 Bcf to a build of 7 Bcf,” Cooper said. “Again, our models show a larger than normal degree of variation. Thus, again, our confidence level is rather low.” He mentioned hearing “unconfirmed reports” of guesses ranging from a 30 Bcf withdrawal to a 20 Bcf injection.

“As always,” Cooper added, “market reaction to the actual number on Thursday will depend to a large extent on Thursday’s price level. A small build with prices at $4.40+ is clearly much different than the same small build with prices at just $4.00.”

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