The cash market rebounded strongly Monday from major weekend softness, although most points failed to recover as much price ground as they had surrendered on the preceding Friday. Gains ranged from around 30 cents to a dollar, with many gradations in between.

Although no one was ready to hail the onset of winter, fundamental weather support is picking up a bit. Frost and freeze advisories being posted for the next day or two in both the Midwest and Northeast were signs that temperatures are starting to fall low enough to prompt the startup of some gas-fired furnaces. Of course, the return of industrial load from a weekend played a part in the upticks.

But at least one marketer was unsure about just how substantive Monday’s rally was. A lot of the new price strength, he said, was due to some sense of gas being oversold Friday and not from a genuine big increase in demand. The Northeast “is going to get its first real cold shot of the season” around midweek, but it won’t be enough to result in any huge onslaught of heating load, he said. It’s still too early in the season for that, the marketer added, but he saw some chance for increased power generation demand.

He thinks traders may be seeing “a recalibration of the market” starting now after Gulf Coast-Northeast basis got squeezed so tightly last week that at times production-area numbers surpassed delivered prices. Although he doesn’t expect Monday’s big advances to continue, the marketer said he does think prices will stay “relatively robust” for a while and to trade in narrower ranges now that they’ve shaken out some highly volatile moves going into the weekend and coming out of it.

“My crystal ball was broken this time,” joked a Gulf Coast trader who admitted not expecting such a strong price recovery after Friday’s large dives. However, she noted that one of her usual Northeast customers backed off Monday, saying he would avoid buying in the swing market until prices get lower. The marketer assumes he is taking gas out of storage meanwhile. She doesn’t see much encouragement for his position, though, noting that with offshore shut-ins remaining at a high level, there doesn’t seem to be much more price downside in the near future.

After a week in which little progress was made in restoring offshore production that was suspended due to Hurricane Ivan, Minerals Management Service had better news to report Monday. Based on reports received from 22 companies by 11:30 a.m. CDT, MMS said shut-in Gulf of Mexico supplies had declined to 1,977.56 MMcf/d, a change of more than 340 MMcf/d from Friday when no change from the prior-day figure was recorded.

Shut-in totals Monday equaled 16.08% of daily Gulf of Mexico gas production, MMS said. The remaining outage of 480,285 bbl/d of oil is equivalent to 28.25% of the Gulf’s usual crude production, it added.

Western markets got some relief from the lifting of a SoCalGas high-linepack OFO that had been in effect Saturday and Sunday.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.