Contrary to most expectations, cash prices started-off the newweek with an upward spike across the board, logging gains of morethan a dime – in most areas – from weekend levels. Most sourcesattributed the rise to active buying as many market players weretaking advantage of below index pricing ahead of anticipated coolertemperatures later in the week. Cash prices at some deliverypoints, such as Northern Demarc and Ventura in the Midcontinent andthe PG&E citygate in California, registered gains upwards ofmore than 20 cents.

“I think what we saw today was short covering in anticipation ofthe fundamental supply/demand picture later in the week,” said aMidcontinent-based marketer, who added that Tulsa expects the firstfrost of the year and highs in the low 50s this coming Thursday. “Everybody left Friday thinking things would go to a buck and ahalf on Monday, but when people came back and realized it was goingto be cold all week, the psychology changed a little bit.” Thetrader explained that market players who went short on Midcontinentpipes over the weekend at around $1.70 were afraid of having tocover their positions later in the week at a $1.90 and decidedthey’d be better off buying the $1.75 gas.

Much of the same attitude was also felt in the Gulf coastmarkets. “I think there’s a little weather coming down and peopledon’t want to pull any storage right now,” one aggregatorcommented. “People are buying the day-to-day gas below index ratherthan having to pull out of storage when this cool snap comesthrough. I think they want to keep their storage topped-off goinginto November,” he added. In any case, the source said he believesthe market is generally soft, and potential still exists that westay below index, at least through Thursday. “But beyond that, mycrystal ball is plastic.”

Another source said while the market is “further and furtherfrom science every time we turn around,” he suspects, based oneverything being up late today, there will be slightly higherprices out of the chute in the morning.

Sources attributed the considerable price-spike at the PG&Ecitygate to strong utility buying. “Electric generation buyers werebuying anything they could get their hands on,” one Californiatrader said. “Power prices are up with the California PX pricingranging from $26 to $44/MWh, and those prices do justify the priceincrease at PG&E citygate.” Prices at the southern Californiaborder were also strong today, gaining about 11 cents. Sources saiddemand was strong “as people were trying to get ahead of scheduledmaintenance on Transwestern starting the 26th by injecting gas intostorage,” one source said (see Transportation Notes). Themaintenance is due to last through the end of the month and willlimit the San Juan lateral capacity to about 175,000 MMBtu/d.

One source pointed out that there is currently an unusualdifference between Bondad prices and those on Northwest Pipeline.”The basic issue is that a lot of gas is trying to go north fromthe San Juan Basin and this is creating the odd situation of theBondad constraint being quite the turnaround from what it was lastyear, when there were constant problems with moving Northwestsupply south” he said. An El Paso source said there was no physicalgas scheduled to flow into El Paso from Northwest at Ignacio duringgas day Monday,

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