Getting a huge prod from Nymex, the bulls stampeded in the cash market Thursday. Gains of about 20 cents or more were common in all regions. The larger increases on either side of 30 cents were in the Rockies/Pacific Northwest, home to much of what little remains of the recent frigid spell.

Sources had reported mixed feelings Wednesday afternoon about whether softness would continue or whether the futures run-up following AGA’s storage report would be able to induce at least a small rebound. The issue got settled quickly yesterday as the April futures contract built on Wednesday’s gain of about a dime with a new run that hit a peak in the low $2.80s. “When the screen took off, all the cash [points] went with it,” said a Gulf Coast trader.

Once again a super-strong market was defying fundamental influences that get weaker with each passing day. Canada had legitimate claims of weather support for prices with sub-freezing temperatures that drove up intra-Alberta numbers C30 cents into the high C$3.70s, a marketer said. But except for snowy parts of the relatively sparsely populated Rockies and Upper Plains, above normal thermometer levels are occupying virtually the rest of the U.S.

For a Midcontinent/Midwest marketer, the big upticks were “pretty well all screen-driven. There are a lot of open $3 calls at Nymex, and somebody’s trying to run this thing up there.” He did allow that much like a month ago, people entering the month in short supply positions are having to pay up more than they expected to cover their loads. The marketer considered it “amazing that cash is still managing to keep up with the screen.”

A Houston-based trader agreed that futures provided the lion’s share of cash strength. But he also asserted that with economic recovery under way and gas having spent some time at relatively low prices after the wild ride of 2000/2001, a lot of previously missing industrial demand has returned and is helping the market seemingly ignore massive fundamental weakness. “Fertilizer plants and processing plants are coming online again big-time,” he said. “I’d say there’s about 6 Bcf/d in industrial load now that wasn’t around at this time last year.” And despite all the talk about bloated storage inventories near the end of withdrawal season, he suspected that at least a few traders were buying for production-area storage injections.

A Rockies trader, however, was a bit dubious when asked about the possibility of new purchases for storage. It seems spikes like yesterday’s would make targeting gas for injection uneconomic, he said.

A Southeast LDC buyer mentioned that the gas market also is getting indirect price support from the oil side of the energy complex. Heating oil futures soared Thursday and crude oil futures hit a six-month high of $24.75/bbl (before eventually settling about a dollar below that but still up more than 60 cents on the day) on reports of falling gasoline supplies and fears that the U.S. might attack Iraq soon. But the LDC buyer added, “We keep wondering when this futures bubble is going to burst. Fortunately our load is dropping off a lot, so we don’t have to buy much of this expensive gas.”

A Midcontinent producer summarized his viewpoint: “You could argue that it is a cascading effect from AGA yesterday, which caused the Nymex to run up, which pushed cash prices, and so on. That is a mighty tight circle to be running in, and traders are getting dizzy. But it’s not a fundamental play, so all this strength could be whisked away with the first sign of weakness.”

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