Spot prices Tuesday started soft, but came roaring back for a strong finish with many points posting double digit gains, in reaction to some relatively strong heating load. The Texas, Midcontinent and Midwest markets showed the greatest strength, while mild temperatures in California and the Southwest forced prices down slightly in the West. Prices in the Northeast rose modestly.

“The market started up pretty soft everywhere and then by 9:30 a.m. or so, for whatever reason, everything shot up like crazy,” said one Midwest marketer. “It was almost a carbon copy of yesterday’s trading day. There wasn’t anything going South; It was mostly demand up here in the market area. Chicago was strong. Longhaul off to the East was really strong. I think a lot of it is in conjunction with the cooler weather and the forecast for more cold.

“There’s some good heating load at night in Chicago and the Northeast,” he noted. “But people are looking for any excuse to run prices up. There’s still a huge separation between the screen and cash. We’re almost still in injection mode. People are just jamming it in there. With the big spread to the screen, they can sell forward month contracts, and still do quite a bit of storage buying.”

Chicago prices jumped into the mid-$2.20s late, he said, while Midcontinent pipes reached the high $1.90s. Most Texas averages jumped a dime or more, and Northeast prices rose to the high $2.40s from the low $2.30s at the beginning of trading yesterday.

“Despite the current level of storage, we are still putting gas in until the end of the month,” said one northeastern LDC. “The spread is still good for the marketers, and as a utility we are putting it in there to fill it up. We have to go into the winter with full fields. We spread it out over the course of the summer, and that has really worked to our advantage because prices now are dirt cheap compared to the beginning of the summer when they were $4-5.”

Nevertheless, he expects the ratcheting down of allowable injection volumes to curb demand later this month. “I’m still surprised prices are as strong as they are. But I don’t think we’ll see another big storage number this week from the AGA. I think we are at the point where storage ratcheting is preventing people from continuing big injections. Ratchets are kicking in for us. I’m expecting prices to be up again tomorrow, but as we get further into the month I think they will fall off. I think as people get closer to filling up storage, there truly will be a glut of supply unless there is unexpected demand no one is accounting for.”

Despite a cold front that dropped temperatures 20 degrees or so in some parts of the Rockies, prices there declined a nickle or so because of the weakness in western markets, said one marketer.

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