Northeast citygates were solidly topping $6 Monday while those in the Midwest edged their way above $5 in a continuing show of strength by the cash market. Only the Rockies lagged behind with minuscule gains, while the rest of the market measured its advance in double digits that exceeded 20 cents in most cases and approached a dollar at Transco Zone 6-New York City.

Sources differed on whether to attribute the new run-ups to futures influence, a return of colder weather or the storage situation — indicating that all three were factors. The South and parts of the West are currently on the mild side, but fronts were expected to bring near-freezing temperatures and/or snow to the upper reaches of the Northeast, Midwest and Rockies.

A Northeast utility buyer said snow was falling through mid-afternoon Monday, “but it wasn’t sticking.” Temperatures would get even colder in the region Tuesday, she said, but nothing like the ice storms of last week was anticipated. Intraday deals Monday were worth premiums of 20-30 cents over next-day flows, the buyer added.

But another trader failed to see much in weather implications for Monday’s new price spikes. He acknowledged that futures strength played a role, “especially in crude oil” (the January crude contract finished a little above $30/bbl based largely on concerns about the effects of Venezuela’s general strike on oil exports, and heating oil also realized a large gain).

However, he recalled “when crude hit $30/bbl this summer and gas was only $3 or so then, so I’m not sure how much relationship there is” between natural gas and crude futures. For this trader, the growing storage deficit is “the excuse” being used by some market players as justification for pushing prices higher. He granted that the October through mid-December period has been about 18% colder than normal, “but a lot of people don’t seem to remember that we began [withdrawal season] with record inventories,” which he thinks makes storage a faulty fundamental in the recent bullishness. “I don’t think we’ll have any problem getting through March. There’s a ton of gas out there to keep prices from going too much higher.”

A couple of marketers had no doubts whatsoever about what was driving cash further upward Monday, pointing to what one called “100% futures strength.” He dismissed heating load as a significant factor, saying some Midwest utilities were returning gas to him instead of buying new supplies. “And it’s too warm to have any operational issues on the pipes,” the marketer added. Christmas week will see some colder weather, but it’s also a holiday period, he observed. “I still think prices will go even higher then,” he said, explaining that he expects there will be enough cold weather load to offset the holiday closures among industrial and commercial interests.

The other marketer put it in simple terms: “Cash strength is based entirely on the screen.”

Florida Gas Transmission was advising shippers to be prepared for the possible loss of Matagorda Offshore Pipeline System deliveries as MOPS began another pigging operation Monday (see Daily GPI, Dec. 10). However, as of late afternoon MOPS had not posted any shut-in notices.

Analyst Kyle Cooper of Salomon Smith Barney said his “initial” estimation for this week’s storage report is a withdrawal of 140-150 Bcf. Thomas Driscoll of Lehman Brothers anticipates a more conservative pull of about 125 Bcf compared to 43 Bcf a year ago and a five-year average of 90 Bcf. Driscoll added that his forecast of “weather-normalized” withdrawal rates is in line with typical five-year average seasonal patterns, but he is “intrigued that the data from the past four weeks has shown an average withdrawal that has been 2.6 [Bcf/d] above weather-normalized averages.”

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