The previous-day screen plunge was able to trump growth in heating load as a cash price influence Tuesday. Some points, primarily in the Gulf Coast and Northeast, were flat to moderately higher, but a decided majority of the market opened the December aftermarket weakly in recording losses ranging from about a nickel to 40 cents or so.

Softness dominated quotes despite all but the southeastern corner of the U.S. having weather forecasts calling for temperatures ranging from chilly to subfreezing overnight lows over the next couple of days.

The West tended to see most of Tuesday’s largest price drops despite having most of the severe cold. Although it did not declare an OFO, PG&E projected linepack levels touching against its minimum target levels. Other factors that made the western price weakness somewhat curious were El Paso issuing an OFO-like notice due to maximum storage withdrawals and Kern River reporting low linepack systemwide (see Transportation Notes).

The Gulf Coast was among the stronger market areas after a cold wave invaded Texas and other parts of the South. Houston-based traders who went home Monday in T-shirt weather likely were rummaging through their closets Tuesday morning for seldom-used overcoats. In fact, Houston’s predicted high and low Tuesday of 50 and 41 degrees almost exactly matched the comparable numbers of 50 and 40 for New York City.

A Gulf Coast producer said there was still plenty of demand for her gas. Virtually all of it goes from Louisiana to markets in the South and Northeast, and although mild conditions prevailed in the nation’s southeast corner, she was finding good heating load in the upper South and Northeast.

Naturally the talk about last week’s storage report and the expiration-day screen spike wasn’t about to disappear from trader conversations. A Texas source said she understood that “quite a lot” of December basis deals got done on last-day settlement numbers. Obviously any buyers who went that route are really upset about what happened, she said. “But most of my end-user customers decided to pull out of storage rather than buy baseload, and now they’re delighted” that they avoided any negative fallout from Wednesday’s screen spike. She echoed the sentiments of many in declaring, “Nobody in the trading community believes that storage number.” The source was among most who finished bidweek trading before the holiday, saying she didn’t get a single call for December baseload business this week.

A Calgary-based producer said, “I couldn’t believe that [futures] run-up Wednesday.” He said such an event could skew some indexes where basis and index deals often greatly outweigh fixed-price quotes. He noted that there’s several ways of doing basis deals: average of the last three days at Nymex, last-day settlement only, or trigger deals at different points based on the trader’s feel for which way prices are going.

The National Weather Service predicts above normal temperatures during the Dec. 6-10 workweek everywhere east of a line that roughly follows the path of the Mississippi River from Minnesota southward until it swings west in northeast Louisiana to include a sliver along the Texas Gulf Coast. Only normal readings in northwest Washington state are excluded from the NWS forecast for below normal temperatures west of a curving line from central Montana to West Texas that bulges out to include western parts of the Midcontinent.

That’s a rather bearish forecast considering that the cold will be concentrated in western states that are generally sparsely populated, while the populous East is expected to experience mild conditions.

Lehman Brothers analyst Thomas Driscoll said he expects a storage withdrawal of 10 Bcf to be reported for the week ended Nov. 26.

This year’s Atlantic hurricane season officially ended Tuesday on a quiet note. The Weather Channel said an area of low pressure about 800 miles east of Bermuda was “acquiring some tropical characteristics,” so it had a chance of development into a subtropical or tropical storm. However, its positioning made entry into the Gulf of Mexico highly unlikely.

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