Much like the day before, cash prices rose by a dime or moreTuesday almost purely on weather fundamentals. Unlike the daybefore, western points failed to lag behind the overall marketlargely due to some supply shortness. The result was generallytight basis all around, ranging from the Rockies in the $2.30sthrough the Gulf Coast and Midcontinent in the $2.40s and Midwestcitygates in the $2.50s to Appalachia and California in the $2.60s.Only Northeast citygates in the $2.80s and $2.90s put muchappreciable difference between themselves and the rest of themarket.

A marketer expects to see yet another repeat of Monday’s andTuesday’s increases today. He noted one weather service’sobservation that despite some areas of snowy weather, such as inthe Plains states and Upper Midwest, the worst of an Arctic coldmass has yet to penetrate the U.S. from Canada. Traders will beanxiously awaiting the AGA’s storage report this afternoon, hesaid.

Contrary to the old gas market adage about “following thescreen,” a Gulf Coast trader said Tuesday was a case of “followingthe cash.” It’s been this week’s strength in physical gas pricesthat sent January futures climbing by nearly 8 cents, he explained.

Intra-Alberta quotes topped C$3 amid below-freezing temperaturesin Calgary.

PG&E citygates “really popped” after the utility issued alow-linepack OFO Tuesday morning (see Transportation Notes), saidan aggregator who paid in the low to mid $2.70s. The OFO itselfwasn’t a surprise, he said, because their inventory reports hadindicated one was coming. What dismayed him was the “very, verytight” tolerance band of 3%; “I expected 10% or 12%.” However,amarketer reported picking up a near-last-minute citygate package atjust under $2.70, saying the seller apparently held on to it toolong and got burned.

Several sources have indicated a desire to complete most if notall of their January business before Christmas. A producer said hehad already sold all of his NGPL Permian equity gas for next monthat index last week, adding, “I shouldn’t have any trouble buying itback during bidweek IF I need it.” Another trader agreed that apre-Christmas rush looks likely, saying that likely will mean a lotof indexing and swaps deals.

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