Colder weather was coming into the Midwest and Northeast while starting to recede along the West Coast, and prices reacted Friday pretty much as one might expect given those conditions. The Southwest basins joined all eastern points in registering gains of about 20 cents or more in virtually all cases. Meanwhile, California and the Pacific Northwest ranged from flat to about a dime lower, while the still-snowy Rockies market was kind of in-between with increases ranging from a dime to a little over 20 cents.

Two traders, one specializing in the Midcontinent/Midwest and the other in the Gulf Coast, agreed that the strong eastern price advances did not seem justified fundamentally. Yes, the major northern market areas were due for some weekend temperatures more closely resembling those of a normal December than the record warmth they had been experiencing last week, the traders said. But the change “just doesn’t seem severe enough to have caused such big price run-ups,” the Midcontinent trader added.

At first the Gulf Coast source was stumped when asked for any “reasonable answer” explaining the big upticks. Then he said, “Well, one thing, maybe: People are still hanging back on withdrawing from storage.” But, he added, that raised its own question: “Why?” Storage inventories are just barely down from the record level recorded at the end of November, a full month into withdrawal season. That makes it difficult to believe that anyone has any worries about coming up short at the end of the winter season, the trader said. “You’d think they’d be wanting to use some of that [storage] rather than pay these sharply higher weekend prices” for new gas.

Still, a marketer reported that after falling for a while Friday morning, prices rebounded in later deals. Then after the cash market closed, rest-of-month pricing continued to get a little higher, he said. Chicago citygates finished around $2.20 for swing gas, but baseload deals through the end of December were being done at $2.30 that afternoon, he said.

A producer confirmed the change of pricing direction, calling the market “unbelievable today.” Numbers started off well above Thursday’s averages, then came off, but subsequently rebounded and continued to build through 11 a.m. CST, he said. “Any weather we get will cause some violent reactions. It doesn’t take much; just a rumor will stir things up.”

Another producer also reported yo-yoing price movement, especially in Appalachia’s TCO pool. “Everyone I know is scratching their heads trying to figure it out. It was heading down, then it got some strength, then started to crash, then was reborn. There were at least three definite peaks and valleys.”

A high-linepack OFO by PG&E (see Transportation Notes) resulted in the day’s only significant declines on either side of a dime for the citygate and border-PG&E quotes, while Malin was flat. SoCalGas did not issue a weekend OFO, and its border deliveries were up about a nickel.

Sumas and Stanfield were flat as temperatures continued to moderate in the Pacific Northwest, according to Northwest Pipeline’s bulletin board, and the Jackson Prairie storage facility returned to injection mode Thursday following several days of withdrawals. Intra-Alberta quotes rose a little more than C20 cents, obviously feeling the demand tug from Midwest, Northeast and eastern Canada markets more strongly than the falling western load, one marketer said.

Sources confirmed that the transition to trading in the absence of Enron and its EnronOnline platform continues to build. “We are doing more of everything: Dynegydirect, Altrade, ICE and the phones,” a Gulf Coast producer said. “You see some new players on ICE. If I have to help any more people learn how to use ICE, then I am going to start charging for tech support,” he jested.

Another trader outlined a slightly different approach: “Instead of doing more business on ICE, we are hitting the phones. You learn a lot more talking to people than doing your deals on-line. You learn who you can trust and who you can’t. It does get stressful when you have to do a lot of deals, though.”

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