While the rest of the nascent December aftermarket Tuesdayreflected a mix of prices both above and below indexes but mostlyon the slightly higher side, Northeast citygates reacted todeliverability limits and increasingly winter-like weather byshooting up to $3-plus in most cases. The spike was most evident atTransco Zone 6-New York City, which saw a tremendous range of about$1.63 from top to bottom led by a high quote of $4.75.

Traders talked about temperatures in the freezing vicinity andTransco capacity constraints (see Transportation Notes) that were allowingonly a little interruptible gas to reach the Big Apple. However, muchof the buzz was about one of the largest marketers that controls anestimated half of the FT into Zone 6 taking advantage of the currentcold spell to leverage its market power into higher prices. Themarketer had taken an “extremely long” position at the New Yorkcitygate, said a competitor, so it “just ran the price up and took theprofits.” Quotes started the day in the $3.10s and just kept risingafter that, he added.

One buyer said he would have loved to accommodate some of theZone 6-NYC bids he was receiving for more than $4, “but we couldn’tsell anything because we’ll need the gas ourselves [today]. It’sgoing to be cold.”

Help is on the way, however; the Canadian National Energy Boardlate yesterday conditionally approved the start-up of the brand newMaritimes & Northeast Pipeline which has been purged and packedand is ready to begin deliveries of about 480 MMcf/d of Sable Islandgas today in New England and eastern Canada. As much as 360 MMcf/d istargeted for the U.S. (See separate report, this issue.)

For whatever reason other Northeast points moved higher but notnearly to the degree of Zone 6-NYC quotes (Algonquin citygates didhit a high of $4). “It was the coldest day of the season so far inthe region, but Texas Eastern M-3 and Transco Zone 6 non-NYC didnot experience the same price rally,” one trader noted. “Everybodywanted to take their gas to New York City.”

In contrast to the Northeast firmness, Midwestern citygates werefalling largely due to an excess of sellers over buyers, accordingto a marketer. He saw Chicago numbers start at $2.23, about wheremost bidweek trading was done, and plunge to $2.05, with most dealsdone in the mid $2.10s. Similarly Michigan deliveries fell frombidweek levels in the mid $2.20s to the high $2.10s forfirst-of-month swing gas.

While California and the Southwest basins joined Gulf Coast andMidcontinent production points in being priced a little over indexin swing deals Tuesday, the market was mostly a bit weaker in theRockies and at Canadian points. Sumas fared worst, falling from themid $2.20s in December baseload quotes to the mid $2.00s in swingbusiness. Similarly, intra-Alberta was quoted in the mid to highC$2.70s after trading a little above C$2.90 in bidweek. Rockiesdeclines tended to be fairly small.

The last day of bidweek was very quiet as few traders had muchDecember business left to conclude. A western trader said he hadseen little fixed-price trading going on. “The spreads were sotight and the risk so high that many people stayed on thesidelines,” he commented.

A lot of where the aftermarket proceeds from here will bedetermined by this afternoon’s AGA storage report, a marketerbelieves. He expects a relatively flat report; that is, 10 Bcf orless in either injections or withdrawals. That would be essentiallya non-event to the cash market, he said,

Naturally buyers and sellers had differing opinions on near-termpricing. To a western utility buyer, “this feels almost like arepeat of last winter where there was a lot of hype for Novemberand then things went downhill from there. Prices for early Decemberaren’t crashing like they did a year ago, but if that warm spell wehad last week had come after December indexes were set, wecertainly would have seen a repeat of last year’s crash.”

But an ever-optimistic producer thinks prices are set to move up50 cents. There may be a dip at first into the $2.00s in theMidcontinent, he acknowledged, “but there is not enough gas outthere to cover it if we see any demand. When the weather kicksin-boom!”

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