Prices continued to soar Tuesday but generally by smalleramounts than on Monday in the Gulf Coast, Midcontinent/Midwest,Appalachia and Southwest/Rockies. However, bigger gains at thefrigid Northeast citygates allowed them to join California and thePacific Northwest in measuring average pricing in four digits.

Most of the production area and Midwest increases ranged fromjust over a dime (Kern River and Northwest domestic) to about 90cents, with a range of 50-70 cents covering many upticks. AllCalifornia points averaged more than $20 as another electricalemergy was declared and both day-of and day-ahead peaking powerprices continued to push the cap of $250/MWh.

A few doubts were arising, though, about how much longer thisweek’s cash bullishness can be sustained after the screen took amorning advance and gradually downgraded it to a moderate drop ofabout a nickel. There was some “on second thought” discounting ofthe new weather reports that had propelled Nymex numbers into thestratosphere the day before, said a risk manager for a marketingfirm. One prominent independent forecaster had said Mondayafternoon he didn’t agree with the revised weather models,projecting that next week’s “Polar Pig” will not be as intense normove into the Northeast as quickly as expected, the risk managersaid. Jon Davis of Smith Salomon Barney also moderated his viewTuesday, he added.

This price structure that has built up needs reconfirmation on adaily basis, the risk manager added. Deciding whether to stake yourtrading strategy on mid-term forecasts is “almost like Russianroulette with four or five bullets,” he said.

A Northeast trader said Tuesday’s numbers started near theirlows, shot up in highly volatile ranges and then tailed off againnear the end. Some of the higher Northeast quotes were starting tosound like the California/Pacific Northwest market of a couple ofweeks ago, he noted, “but since then the western points have lappedthe Northeast by tacking on another 10 dollars or so.”

Despite the screen’s late softness, the Northeast source thinksthere is enough pent-up demand associated with nearly two fullweeks of very cold temperatures to keep the cash market fromsoftening much if at all. He observed that besides the currentprice spikes appearing to be more long-lasting than those ofFebruary 1996, “also remember they come on top of a much stronger[price] support base.”

A producer said his company is expecting another strong pullfrom storage in AGA’s report today. “It’s got the momentum to goup,” he said.

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