Other than continuing consolidation of Northeast citygates and a smidgen of Pacific Northwest softness, the cash market saw a broad-based rally Tuesday. A soaring screen was an obvious positive influence on cash. But despite predictions last week of moderating weather by now, winter storm warnings for the Mid-Atlantic, Northeast and eastern parts of the Midwest also played a part in the new burst of bullishness.

The general rebound was relatively modest with gains being limited to single digits. But the consensus among sources was that prices will continue higher Wednesday, based on rising numbers in Tuesday’s late cash deals and residual momentum from the Nymex spike of nearly 30 cents, much of which occurred after a lot of cash trading had been completed. The crude oil and heating oil contracts also wound up with sizeable gains after spending the morning in negative territory.

Some cash sources didn’t know what to make of the Nymex show of strength, although a western utility buyer said, “The new Jon Davis forecast is all we heard about the futures spike” (see related story). “Otherwise we’re just scratching our heads over it. The forecast [of a new round of bitterly cold weather] is for Christmas week, when a lot of people take off work and industrial demand is off,” which would mean diminished impact from an increase in heating load. “Besides, there’s plenty of time between now and then to add to your length, so why try to do it all in one day?”

The buyer went on to observe that if the screen continues to lead cash up this week, “will power prices go up with them? Otherwise, electric utilities in the West will start buying less gas because you can’t generate economically as gas starts going over $4” unless revenues from power deals also increase.

There’s a lot of overall bullish sentiment in this market, said a Gulf Coast trader who observed that all the screen’s out months were up strongly in addition to the January contract’s gains. “We saw wide ranges today, as late deals followed Nymex higher. Prices started up a bit, dipped briefly and then slammed way up.” He added that expectations of a large withdrawal volume in EIA’s storage report Thursday morning probably gave a little extra psychological boost to cash quotes.

Not everyone is buying into the popular perception of a very big withdrawal figure coming up, though. “With all the cold weather thus far this month, we are behind on storage,” said one Northeast utility buyer, explaining that the company pulled more than its planned amount on an average basis. “However, we have seen the weather forecasts and feel that we should be able to make up the difference during the upcoming December thaw. Though we are utilizing all of our capacity, we have yet to have to buy gas in the spot market. That is certainly a good thing considering the current price level. Our temperatures last week were in line with Thanksgiving week [when 91 Bcf came out of storage], so I can’t imagine the market will see a withdrawal this Thursday of much more than 100 Bcf.”

A Midcontinent marketer said he still perceives some strength left for further futures gains. For him, “it’s purely a screen-driven market right now with weather starting to back off.” Relative to where the screen is now, however, Midcontinent cash numbers have been falling back proportionally as the month goes on by not keeping pace with the Nymex upticks, he said.

A western marketer, marveling at the screen run-up, commented, “Nothing is really changed in our region. It’s still a little bit bearish in the Pacific Northwest,” even though Oregon and Washington were also getting winter storm warnings similar to those in the East. She noted that intra-Alberta prices only gained a few pennies Tuesday and didn’t follow their usual tendency of closely tracking the screen.

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