Winter made its official debut Sunday, but outside of the Rockies and Upper Plains there was little evidence of the season Monday. Forecasts of continuing relatively mild weather through the weekend helped accelerate the price declines that had begun Friday. Monday’s losses were generally in the range of 35-85 cents, with most exceeding half a dollar.

Bullish types searching for any hint of a near-term rally were devastated by a natural gas screen plunge of about 65 cents, which was accompanied by major weakness throughout the energy futures complex. Crude oil for February delivery (the January contract expired last week) fell more than a dollar to less than $31/bbl.

“You sure can feel how quiet the market is today [Monday] with so many traders out on holiday vacations,” observed a Northeast trader. “It means the ones that are left can move prices hugely without much effort.” He reported seeing Dracut trading flat to Henry Hub in some instances, “which is highly unusual” but reflects how much Northeast demand has fallen off since last week. Regional utilities bought spot gas for a while during the first half of December, he said, but then switched to storage draws after spot prices got above their first-of-month WACOGs. “It’s showing up now in diving prices, and the all-around Nymex energy plunges are sure to keep cash going down Tuesday.” The trader added that he wouldn’t be surprised to see the January screen go off the board below $6 next Monday.

A marketer provided another strong indicator of continuing softness in reporting several Michigan citygate (Consumers Energy) packages dropping from the high $6.30s to the low $6.20s as trading went on.

In addition to the price drags of mostly moderate late-December weather and extremely weak futures, gas demand suffered from the habit of many industrial firms tending to wind down operations temporarily during the Christmas and/or New Year’s Day periods, cutting into that sector of gas demand. Also, Sonat and Florida Gas Transmission had ended the only significant OFO-like constraints over the weekend (see Transportation Notes).

Through being one of the few areas still experiencing freezing weather, the Rockies tended to see most of the smallest declines of less than 45 cents.

“It depresses me to have so many trading counterparties out while I’m still working,” a Gulf Coast marketer joked. He estimated that about a third of the people he usually deals with were on vacation until next week, “and most of the end-users and utilities I’ve talked to will be out Wednesday through Friday.” He doubted that Monday’s major price losses would upset many in the trading community, noting “there’s been so much talk about how all gas consumers who can do so will be switched over to fuel oil by January, and we don’t want to erode gas demand any further.”

A producer said it was a “little tougher than usual” to find a market at Sumas, but he didn’t think it had anything to do with what appears to be a long-term outage of Northwest’s 26-inch line from Sumas to Washougal, WA (see related story). More significant, he said, was unseasonable warmth around Calgary, which was at plus 7 degrees C. (mid 40s F.) Monday afternoon. By keeping less gas at home, that increased the drive to find export demand.

A major cold wave remains on target for the first week of January in the central and eastern U.S., according to a Weather 2000 advisory. Research over the past several days “has reaffirmed that both the most widespread and intense period of cold air that we have seen so far this season will arrive next week,” the consulting firm said Monday. “Because of the magnitude of this episode, locations as far west as the Canadian and U.S. Rockies will get a glancing blow first (concluding few days of December), before the balance of the nation gets [its] turn on New Year’s and going forward. Give a day or two before the South and East see the cold anomalies that the North-Central experiences first, and factor in some diffusion of the coldest air from when it first enters the U.S. and as it spreads out.”

With absenteeism among traders likely to grow through Wednesday, one source thought bidweek might be little more than an afterthought this time around. It may not matter much anyway, he said, since “many of the people I’ve talked to have already finished January [baseload] business.” The old practice of defining bidweek as the last five business days of the month is rapidly being left behind, he said.

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