When there are freeze warnings across much of the South, you’ve got to figure the gas market is going to be at least somewhat bullish. Monday’s market was more than just “somewhat” bullish, posting solid double-digit gains across the board.

Substantial heating demand created by cold weather throughout Canada and most of the U.S. was the primary reason for cash quotes rising from about a quarter to 80 cents or so. No single area stood out as appreciably stronger or weaker than others. A 10.9-cent advance by November futures on the previous Friday and the return of industrial load from a weekend slump provided additional support to the physical market.

However, higher prices may not survive past Monday. For one thing, following a positive start the screen turned around and headed south, closing 36 cents lower on the day in what was termed a corrective action (see futures story). Also, a moderation of temperatures will be under way in the South and Midcontinent, and it’s not getting all that terribly cold in the Northeast (the forecasts for Boston and New York City have overnight lows not getting below the 40s). Another bearish influence is that despite frosty mornings in the South, “Afternoon readings will warm nicely, however, with highs in the 50s, 60s and 70s dominating,” as The Weather Channel put it.

Any declines Tuesday, though, likely will be fairly small, argued one source, who pointed out that lows in the vicinity of freezing will persist in the Midwest, Rockies and Western Canada.

For the first time in a good while, no OFO-like constraints of any significance were having an impact on the market. Transco reflected the improvement in transport conditions by saying customers were being allowed to create “due-from-shipper” imbalance nominations again and ending a 1% limit on pool imbalance tolerances (see Transportation Notes).

Monday’s gains carried all but two points — the Southern California border and the PG&E citygate — to $3-plus premiums over first-of-month indexes. The two California points fell just short of those levels, trading in the high $2.90s over index.

Count a Texas-based marketer among those expecting a softer market Tuesday. It’s not cold enough to keep cash numbers from falling in reaction to Monday’s screen weakness, he said. In addition, although weather-based demand lifted prices at first, quotes were tailing off in the late going, he said. And that was with futures not starting to weaken until nearly all cash trading had been finished, he pointed out.

To further bolster his expectation of lower prices, the marketer said he saw Henry Hub being bid at $6.72 and offered at 7.13 on a swing swap basis for the balance of the month. “That’s a very wide range,” he pointed out in understatement. The Hub averaged around $7.30 in Monday trading.

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