Bolstered by a return of winter-like weather in northern market areas and parts of the West, along with positive natural gas futures during morning trading, the cash market saw a surge in prices Monday. Although gains went as high as 20-25 cents or so in California and at some Northeast citygates, most were more modest on either side of a dime. San Juan and intra-Alberta numbers generally ranged from flat to less than a nickel higher.

In addition to some extra support from returning industrial load after a weekend, prices also were responding to a considerable number of current nuclear plant outages, nearly all for regular maintenance or refueling, a source said. This was especially evident in the West, the only region where power prices were going up for Tuesday delivery. Besides nuclear downtime, there were also some western coal plants down over the weekend, a western trader noted.

Although the natural gas screen supported the physical market by trading more than a dime higher during the morning, it went south in the afternoon for an eventual daily loss of a little more than 8 cents. Several cash sources were at a loss to explain the Nymex turnaround, although a marketer said he had to think that crude futures “falling more than a buck,” accompanied by a similar big drop in crude oil futures, eventually influenced the gas contract downward. Another trader suggested that the oil numbers registered major losses because Secretary of State Colin Powell had indicated on Sunday TV news programs that a U.S. war with Iraq was not nearly as inevitable as it had seemed in recent weeks.

“I don’t know why the screen went from positive to negative today [Monday],” a Gulf Coast marketer said, “but I thought it was overdone to begin with. I just don’t understand why it wasn’t falling more last week rather than waiting until this week.” His Henry Hub deals rose from the $4.20 area early on to the mid $4.20s near deadline, but that was before the futures downfall, he pointed out.

The marketer and a few other traders acknowledged that cold weather demand is likely to remain strong through at least midweek, but they didn’t expect it to be sufficient to keep cash quotes from “following the screen” lower Tuesday. A western trader reported seeing hints of softness already, saying that intra-Alberta was being bid for Wednesday in the high C$5.20s, down from his mid $C5.30s average Monday and nearly matching the screen’s daily decline.

A producer was relatively unimpressed with the cold weather explanation of Monday’s bullish trend. “They [cash prices] shot up so much, I guess they followed the monthly [futures] contract up. Our technical guys say they were bearish, so there must have been a short squeeze on supplies. The [Henry] Hub should be at least 10 cents back with all the storage in the ground and no real cold weather.”

Northeast citygates in the $4.50s and $4.60s continued to top the price hill Monday. “I had to scramble all morning to cover my daily stuff, and none of my trades were really reflective of where the market was,” said one Northeast trader. “There were supply issues all around New England. Sable Island had some outages…that didn’t help.”

Florida citygates, which had held the title of most expensive point as recently as about a week ago, were only in the low $4.40s Monday. A Florida utility buyer said “about the only thing happening around here is that gas demand in the state has plunged since early last week,” which was probably why Florida Gas Transmission was in its fifth straight day of no Overage Alert Day notices Monday.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.