Despite the sharp plunge in the futures market Monday, natural gas cash prices moved significantly higher across the country, jumping 75-90 cents in the Northeast, for example, largely in response to some of the season’s coldest temperatures.

An Arctic cold front moved through parts of the Midwest, Northeast and Ohio Valley Sunday, and behind it a cold Canadian air mass barreled into the regions and was expected to drop low temperatures into the mid 20s in many places Monday and Tuesday night. “We’re expecting the first freezing temperatures of the season tonight,” said a Northeast marketer.

He said market area cash basis widened substantially, averaging at least 60 cents over the Hub, which was well over transportation costs from the Gulf of Mexico. Northeast cash points reached the mid-$7.40s in some locations. Gulf Coast points, meanwhile, lagged behind with increases of about 50-60 cents on average to the low $6.60s. Many places across Upstate New York and northern New England are expected to remain in the 30s during the day on Tuesday with strong winds making it feel even colder.

Chicago basis to the screen tightened to around 80-85 cents at times Monday from being a negative $1.95 or so on Friday. “If you had a little storage — and I did on Friday — certainly that was the time to buy gas and hedge it against December,” said a Midwest marketer. “There certainly is more demand during the week. You have to assume that colder weather will continue increasing cash prices.”

There was some milder weather expected on Tuesday in the Midcontinent/Midwest, but another cold front should move through on Wednesday and Thursday, dropping temperatures to 5 to 15 degrees below average with highs ranging from the 20s in northern Minnesota to the 50s in the Ohio Valley Thursday, Weather.com said. “Prices may slip tomorrow because of the screen and the milder weather briefly moving into the Midwest, but should come back later this week, so expect a spike relative to December again,” the Midwest marketer said.

With prices still $0.60-$1.40 less than November bidweek levels and substantially below December futures, buyers also probably will continue to find swing packages more attractive than storage withdrawal even during a little cold weather, the Midwest marketer said. “As long as we are below index, I think you will see people out buying spot gas rather than pulling from storage. The spreads to December are still so attractive, if anything I would expect people to be injecting gas if they can find any storage space at all.”

Predictions for this week’s storage report call for a small injection of about 10-20 Bcf, according to several analysts. CitiGroup’s Kyle Cooper is predicting a 20 Bcf injection, while Thomas Driscoll of Lehman Brothers is expecting a 10 Bcf injection and consultant Stephen Smith is forecasting an 18 Bcf injection.

Even a 10 Bcf injection would put working gas levels over the 3.3 Tcf mark, a point reached in only three (1982, 1990 and 1991) out of the last 28 years, according to EIA monthly data. Current working gas levels at 3,293 Bcf are 179 Bcf less than the all-time record high of 3,472 Bcf set in November 1990.

Storage will continue to put downward pressure on prices. But there also seems to be a more than adequate amount of gas in the pipeline grid in some places. For example, PG&E called a high inventory system-wide operational flow order for Sunday and Monday with 0% and 5% tolerances, respectively, and $5/Dth penalties. Some of the smallest price increases on Monday were seen in the West with PG&E Citygate, for example, rising by only about 30-40 cents. The rest of the market was uniformly up 60-75 cents.

The 6- to 10-day and 8- to 14-day forecasts by the National Weather Service show some warmer weather on the horizon for the bulk of the country. A large area of above normal temperatures is expected over the central part of the country. Below normal temperatures are expected over the West and — in the 6- to 10-day — the Southeast.

On the other side of the equation, the Minerals Management Service said Monday that production shut-ins barely budged over the weekend and remain at 741.56 MMcf/d, based on reports from 18 companies.

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