Looking at sharply higher Northeast prices by themselves, an observer would conclude that Thursday was a rampaging bull market for cash gas. But in the overall market context, non-Northeast quotes ranged from a few pennies higher to as much as 10-15 cents down at some western points. Either side of flat was the rule for a majority of the market.

The long-anticipated blast of arctic cold was just reaching the Upper Plains and parts of the Midwest Thursday. It also was touching the upper reaches of the Northeast, but a couple of utility traders in the lower half of the region said their temperatures remained relatively mild for this time of year. However, they acknowledged that conditions would be changing drastically Friday and for several days afterward.

New England numbers again saw the biggest gains. Deliveries from Maritimes & Northeast into Tennessee at Dracut, MA, peaked at $8.25, a producer said, largely because of market-area transportation constraints on both Algonquin and Tennessee.

Once again, the combination of Nymex and a storage report provided puzzlement for some cash traders. EIA said storage had been drawn down by 86 Bcf last week, a volume that was undeniably bearish by falling below virtually all prior expectations and radically cutting the year-on-year deficit. But after a to-be-expected dip, the screen began clawing its way back to flat at first and then to an eventual daily advance of 14.3 cents. A marketer said the rebound had something to do with super-strength in the crude oil and heating oil trading pits (which also were softer initially), “but I think it was more due to the tendency of the market to be bullish.”

A Northeast utility buyer thought another factor in the futures recovery was that “Nymex shrugged off the storage report and focused more on this lengthy siege of cold heading our way.” It was still on the mild side Thursday, she said, but would be freezing Friday and from the weekend through much of next week highs were not expected to get above the mid 20s. “We’re looking for a low of 6 degrees around midweek,” the buyer added.

“The 86 Bcf withdrawal was pretty light,” said a marketer. “[Nymex] prices jumped down in a huge reaction, then traded up fairly quick. When cash was done trading, the Nymex was only 3-5 cents below where it started. Since then the contract has run up more than 15 cents, so we should see a good jump in cash tomorrow [Friday].”

“Warm weather this week will likely lead to a low withdrawal next week,” Lehman Brothers analyst Thomas Driscoll said in an advisory. “We estimate that next week’s storage report will show a withdrawal of roughly 105 Bcf versus 142 Bcf one year ago and the five-year average of 113 Bcf.”

Although the polar air mass appeared to be arriving earlier in the Midwest than in the Northeast, mild softness in the Midwest came nowhere close to matching the Northeast’s skyrocketing numbers. One source attributed the difference to the pipeline constraints in New England. However, NGPL was cautioning shippers that starting with Saturday’s gas day, they must limit their hourly takes at all market-area delivery points or risk an OFO.

Buying gas for New England delivery was a little odd, one trader said. “There were restrictions on Thursday morning, and they took them away, then brought them back for Friday.”

A utility buyer reported experiencing “little [supply] cuts” on MOPS from this week’s pigging operation, but added they were negligible and not enough to post on the pipeline’s bulletin board.

A western trader said prices strengthened a bit at Waha to the $4.70 area, but most of the rest of the region recorded Thursday’s largest declines, led by downturns of more than 15 cents at the PG&E citygate and border-SoCalGas. San Juan Basin numbers were weaker than what she expected in relationship to mild Rockies strength. “We were trading pretty close to next month’s values” in the West, the trader said. The effects of the screen’s late run-up should be reflected in cash business Friday, she added.

A Gulf Coast marketer was a bit dubious about the screen’s carryover support, but grudgingly acknowledged, “I suppose cash will be a little higher Friday unless Nymex takes a big hit overnight. After all, we are going into the weekend and not everywhere will be as cold as the Northeast and Midwest.”

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