So much for the “reality” of fundamental weakness forcing prices into a consolidation period. That had appeared to be the case Thursday, but it was being repudiated in a huge way Friday. Gas quotes for the weekend advanced by 20 cents or more at all points, with the West’s larger gains being driven both by cold weather and sharply higher prices for electricity.

It’s simple economics, according to a Gulf Coast producer. “There are more buyers than sellers.” He cited the rebounding economy and low rig count, acknowledging that they’re not new topics, but contending that their influence may have been underestimated in previous talk about rising prices flying in the face of mild weather and bulging storage inventories. “This could be shaping up to be another 2000,” he suggested. “Maybe people should quit trying to fight it and jump on for the ride.”

Another factor in recent price strength, the producer continued, is that “for the second month in a row people shorted the indexes and were going to cover it with daily purchases.” They’re still paying the price for miscalculating “because every time you put out an offer, it gets taken. This market has seen $3 gas before, that’s for sure.” He doesn’t see any major market weakness for the rest of March, observing that Henry Hub was trading at $3.01-02 in balance-of-month baseload deals Friday. That was a penny or two over weekend swing prices. Cash and futures prices are feeding off each other now, he said.

Although it could hardly be considered severe, a spell of late winter weather did figure into the weekend price equation. Temperatures got above zero briefly Thursday in Calgary, a marketer reported, but on Friday readings around minus 20 degrees Celsius had returned to Western Canada. Frigid weather with occasional snowfall was spread across the northern tier of U.S. states and down into the Rockies, and a cold front was expected to dip into the upper levels of the Southeast towards the end of the weekend.

It was cold enough in most of the West to make a difference in prices, traders said, but primarily the big increases there were prompted by soaring power prices. Quotes went as high as $59/MWh at Mid Columbia, and it and the West’s NP-15, SP-15 and Palo Verde points were averaging in the low to mid $40s, nearly twice the numbers posted in more easterly markets. That was having its effect on gas prices, as most if not all of the region’s gas peaking units were being fired up, said a marketer quoting border-SoCal at $3.10-11. One Palo Verde nuclear unit was down, and there were also reports of an outage of a major coal-fired facility, he said.

Other factors in western price strength included Opal Plant maintenance that will continue through Thursday of this week and is keeping an estimated 300 MMcf/d off the market. And Kern River’s two-day Muddy Creek outage had ended, leaving a need to rebuild its linepack, drawn down during the Muddy Creek work, and restoring an extra outlet for Opal gas, one trader said.

It was interesting that even with Northeast citygates seeing bigger upticks than Gulf Coast production numbers, both Tennessee and Texas Eastern issued shipper advisories warning against positive imbalances because of high system linepack (see Transportation Notes).

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