Although fundamentals seemed to be ignored in Tuesday’s mostlysofter market, traders apparently got a wake-up call Wednesday tothe fact that temperatures remained near or below freezing innearly all areas outside the desert Southwest and were expected tostay that way through the end of 2000. The result was largeWednesday advances at nearly all pricing points, with a few gainsexceeding a dollar.

Only MichCon citygates experienced a moderate decline. The pointremains weak relative to the rest of the cash market due to readyaccess to abundant storage in the LDC’s service territory, amarketer said.

According to the calendar, the winter season officially beginstoday. Some incredulous gas traders must be thinking, “Then what’sthat stuff we’ve been seeing since November in some areas?” Anotherarctic blast will be approaching the Midwest and Northeast today,one forecasting service said.

Many people apparently are more cautious than anticipated aboutpreserving their storage gas this early in the heating season. Theypreferred instead to buy new supplies last week, especially whenprices were mostly falling after a Monday (Dec. 11) spike to beginthe week. The result was AGA reporting a net storage withdrawal ofonly 158 Bcf last week, considerably less than prior expectationscentering around 200 Bcf. Also, a Northeast trader noted that thewithdrawal figure was tempered by a relatively warm weekend in hismarket area.

Although natural gas futures fell off sharply following thestorage report, they still managed a net gain of more than 20 centson the day while the heating oil and crude oil contracts enduredmassive selloffs.

Until recently most long-range forecasts called for a colderthan normal November-December period followed by warmer than normaltemperatures through March, a Texas producer observed. Now doubtsabout that scenario are arising, he said, and some think that atleast January might be as cold as December has been.

As many sources agree, holiday interruptions tend to makebidweeks much more complicated. Some expected a push today to get afair amount of January business completed before the Christmasweekend. Others argued that most traders will want to wait forfresh weather forecasts following the holiday before committingtheir January gas. There was consensus, though, that little ifanything will get done Friday. “Everybody will be ready for ahalf-day Friday because Nymex closes early,” a marketer said, sothey’ll rush to get their weekend swing deals completed and headhome around lunchtime.

A couple of western traders agreed SoCal border basis forJanuary was running around plus 500 Wednesday, and one said he washearing fixed prices of about $15. Other scattered basis quotesincluded plus 480 for Malin, minus 30-27 for Texas Eastern-SouthTexas and minus 58-53 for Northwest-domestic.

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