More than one trader got fooled trying to predict Thursday’s market. Sources had been near consensus Wednesday in expecting that day’s price slide to continue. Instead, cash quotes managed a fairly strong rally, rising between about a dime and a quarter nearly across the board. Only a nickel loss at the Algonquin citygate ran against the overall market grain.

The screen really threw a curve at any would-be prognosticators of weekend pricing. It soared by more than 20 cents at one point following the Energy Information Administration’s report of 159 Bcf being withdrawn from storage. The volume was just under the top end of the range of prior expectations, so a bullish futures reaction seemed appropriate. But then Nymex plunged to post a 45-cent trading range for the day and wound up down just over 23 cents.

A couple of sources wondered if they had missed a major news event, such as a nuclear attack by Iraq, that might have sparked such a colossal turnaround. Finding no such news, they could only chalk it up to psychological or technical factors. “The screen was overvalued to start with, so I’ll take it [plunge], whatever the cause,” commented a Southern utility buyer.

Another eastern trader said he had no idea why such a radical change occurred, but added, “I suppose people got loaded up on the wrong side of the boat and decided to bail out. It was a painful day for me. Fundamentally nothing has really changed.” He noted that Gulf Coast and Northeast prices repeated Wednesday’s tendency to rise in later deals. That was another puzzling thing about Thursday’s trading, he said, because it is relatively mild in the Northeast for now and through the weekend, although by Monday high temperatures will only be around 40 degrees.

The northern half of the West, along with parts of the Upper Midwest, had some weather justification for their price firmness. Snow and/or winter storm warnings were expected to persist into Friday. But the forecast for most regions was for relatively mild weather.

“Even with technical factors, there is no reason for cash to be as high as it is,” a Gulf Coast trader said. “There was some serious [screen] volatility. I sure hope someone made money. Going into the weekend there will be warmer temps. I would like prices to come way down, but I just don’t see it.”

“I thought the screen should have had strength from that storage report,” a western producer said. He saw a possible clue to the dive in the apparent weakness of the upcoming January market. Opal is running at index minus 8 cents, while Opal basis is about minus $2, he said. He did a SoCal border deal at the NGI index flat, but agreed with other sources that just about everything else for January is or will be trading at discounts to index. “I think it’s looking very weak because so many people think Nymex has gotten too high,” he said.

Despite heavy discounting from indexes and considerable basis weakness, it’s looking like January indexes will be up substantially from December’s. Since the December screen expired at $4.14 and the January contract was about 90 cents higher Thursday, only a Nymex crash would prevent higher January indexes, a marketer pointed out.

Based on the forecasts for Christmas week, such a crash would be unlikely amid what is expected to be quite bullish weather. According to Weather 2000, “In the shorter term, December 2002 should go out with a stormy and wintry bang. More intrusions of colder air from Canada should trigger some lake-effect snow output over the weekend and early next week, and our confidence in a Christmas-time Nor’easter…continues to increase. This should lash the Southern states with severe thunderstorms and flooding rains, the Appalachians and Mid-Atlantic with a wintry mix of rain, ice, sleet and snow, and potentially substantial snow for the Northeast, all culminating during Christmas week.”

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