The cash market continued this week’s astounding price run-up with growing momentum Wednesday. Gains were even larger than the day before, with several points recording upticks of a dollar or more and virtually all others up by at least 65 cents or so.

It looks like the climb still has a way to go. Although the tremendous advance in the physical market did begin the anticipated process of convergence with the screen, the November futures contract was feeling its oats again Wednesday and rolled to a daily settlement of $7.623, an even 50 cents higher than Tuesday. That should ensure that cash numbers continue to rise Thursday, one source said.

In fact, Nymex’s entire energy futures complex skyrocketed. Following two days in which gas and oil went their separate ways — natural gas strengthened Monday and Tuesday while crude softened from recent record heights — the two products were back on the same page again Wednesday. Crude for November delivery spiked by $1.63 to $54.70/bbl after hitting an intraday high of $55.20. Other oil-related futures contracts also soared after the American Petroleum Institute and federal Department of Energy reported larger than expected inventory drawdowns during the previous week in all categories except for DOE’s saying crude stocks had risen, but even that was smaller than the expected increase.

California prices continued to join the overall market uprising despite PG&E widening a customer-specific OFO implemented Wednesday into a systemwide high-linepack OFO for Thursday and SoCalGas extending its own Wednesday OFO through Thursday. Border prices rose about 80 cents and PG&E citygates were up nearly 70 cents.

It’s a runaway market, “and I don’t know when it will stop,” said a Midcontinent/Midwest marketer. He was unable to see anything weather-driven about the new price jumps, saying all Midwest forecasts call for mild weather with daytime temperatures in the 70s through the end of the week. He thinks the market’s ability to realize huge price increases in the face of weak weather fundamentals and bearish storage inventories is happening “just because it can.”

“It’s amazed me how strong cash has been and how much it has followed futures” because the near-term weather forecasts seem mostly bearish, the marketer continued. “Maybe it comes from a lot of people going into October short and now they’re having to pay the price.” For the Gulf Coast-East, convergence with natural gas futures has almost been achieved for all practical purposes, he said.

After finishing Tuesday almost exactly a dollar below the screen, Henry Hub spiked more than a dollar Wednesday to the mid $7.20s, or a little more than 35 cents less than the Nymex settlement. Some Northeast citygates were topping out around $8.

A Gulf Coast trader noted that those who shunned buying October baseload during bidweek may have enjoyed an advantage at times earlier this month when most swing prices were below index, but now they’ve got to ante up substantial premiums. “I’d hate to have to explain to my boss if I was short,” she laughed. (Wednesday’s price averages were only about 70 cents above the comparable NGI first-of-month index at Transco Station 30 in South Texas, but otherwise the index premiums ranged from about $1.15 for Kern Delivery to more than $2 at the Houston Ship Channel, with most points being more than $1.50 higher.)

“I don’t get it,” the Gulf Coast trader went on. “I was out of town for several days until Tuesday night, and I was shocked at this morning’s market.” She said she had to assume that cash was trying harder to converge with the screen than the other way around. “This has scared everybody off,” said the trader, reporting that she had tried hard to get some November baseload deals done, but could get only one buyer to commit.

Much of the West will stay cold — and snowy in some sections — through Thursday; much of Texas remains a bastion of air conditioning load with highs in the low 90s; and highs in upstate New York and northern New England will only be in the 40s Thursday, according to The Weather Channel. But that’s about the extent of weather that could be considered bullish in the near term. Other regions will have seasonal or slightly warmer temperatures in the next few days.

The National Weather Service predicts above normal temperatures for most of the East during the Oct. 25-29 workweek, with the exception of expected normal conditions in the Northeast and Mid-Atlantic. The above normal outlook includes nearly all of Texas and southeastern New Mexico. Below normal readings are forecast for the West Coast states along with northern Idaho, western Montana and southwestern Arizona.

The volume of Gulf of Mexico shut-ins was unchanged from the day before at 1,544.08 MMcf/d Wednesday, Minerals Management Service said. The cumulative total of deferred production since Sept. 11 hit 94.088 Bcf, representing 2.114% of the Gulf’s annual output, the agency added.

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