In a somewhat surprising move attributable chiefly to the screen’s Thursday afternoon turnaround into positive territory (and aided by some colder weekend weather in parts of the Midwest, Northeast and South), cash prices saw hefty increases at all points Friday.

Just as Thursday’s big losses were fairly consistent across geographic market areas, Friday’s gains were much the same in ranging from around a quarter to nearly 80 cents. However, all of the Northeast citygates were clustered near the top end of the increases.

A couple of traders found it difficult to rationalize such major weekend price firmness. Sure, the screen’s Thursday uptick of a little more than 20 cents provided some impetus, and heating load was up a bit on such factors as freezing temperatures due Saturday in the Midwest, they acknowledged. But that shouldn’t have outweighed the fact that weather in general remains unusually mild for the middle of January, plus industrial load drops over the weekend, they argued.

Cold fronts were due Saturday in both the Northeast and South, although snowfall in the Northeast would largely be limited to area close to the Canadian border, according to The Weather Channel (TWC). Chilly rain, but no snow, was expected in a good bit of the South. After getting a dump of 3-8 inches of snow Friday from the upper Midcontinent through southern Michigan, the Midwest was predicted to quiet down with only light snow predicted Saturday for North Dakota and the northern edges of Minnesota and Michigan, although temperatures would be cold, TWC said.

Meanwhile, in the West the weather news was more focused on a probable break coming from a record-setting (and flood-causing) streak of rain across the Pacific Northwest than on temperatures. Freezing temperatures and light snow were likely only from the Cascades to parts of the northern and central Rockies and the high plains of Montana, TWC said.

To a Northeast trader, Friday’s cash gains were pretty much driven totally by the screen’s turnaround late Thursday. “While we were trading cash Thursday morning, the Nymex was still down around $8.50,” he said, so there was some psychological support for cash when it began trading again Friday with the screen having moved 40 cents higher in the interim. There wasn’t a lot of change in the fundamental weather demand situation beyond “maybe a little cooler this weekend,” the trader continued.

However, an analyst may have had a good point in suggesting that the cash market was trying to “play catch-up” with February futures. After all, their going in opposite directions Thursday left Henry Hub about 90 cents behind the screen that day. The gap was narrowed to half a dollar or so in Friday’s trading activity.

A Midcontinent producer predicted that despite Friday’s big (but not really justified, in his opinion) price advances, “basis is going to blow out” in trading for February. “Bidweek is going to tell the story” of how really weak this market really is, he said. February baseload numbers may start fairly high but then will get hammered because of the great need for using up storage during the month, he added. Many operators require certain amounts of storage to be taken out by certain dates or the customer pays a penalty. Regarding the continuing screen strength Friday, the producer called it “a tale of two markets: the folks at Nymex don’t trade gas, they trade financial paper.”

A Florida utility buyer said the northern half of her state had seen one day of freezing temperatures late last week, which was kind of unusual because very little of the rest of the South was getting that cold.

Another source considered Florida Gas Transmission’s warnings Wednesday and Thursday of potential Overage Alert Day notices due to the colder weather as not terribly significant. When it does issue one, the pipeline usually sets the negative imbalance tolerance at 25%, he noted, adding that traders who often deal with much more stringent tolerances on other pipes during OFO-like actions probably find that laughable.

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