What had seemed like an extremely weak cash market going into the weekend came roaring back to life Monday with huge price gains that often matched or exceeded the losses of the previous Friday. Dollar-plus increases were common in response to what one analyst said were forecasts for the rest of October and November that had turned much colder over the weekend.

Indeed, in its six-to-10-day outlook posted Sunday for the Oct. 21-25 period, the National Weather Service (NWS) predicts below normal temperatures for almost the entire U.S., with the most severe cold to occupy the Plains, most of the Midcontinent and all of the Midwest except for Ohio and southern Indiana. The only areas where NWS expects normal to above normal readings is peninsular Florida and all of California except for a strip along its southeast end, along with western Nevada, western Oregon and the coastal edge of Washington state.

Monday’s upticks ranged from a little more than 30 cents to more than $1.65.

The PG&E citygate managed an increase of more than $1.10; the utility, which had a systemwide high-inventory OFO in effect Saturday and Sunday, lifted the OFO for Monday and didn’t declare a customer-specific OFO until well after cash trading had been finished. PG&E projected that linepack would be just above its maximum target level through Thursday.

Although volumes of gas in storage are considered more than adequate to handle a cold winter, the early snowstorm in western New York state late last week and the new forecasts of colder weather later this week in almost every market area may have spurred more bullish market psychology, one source said.

It’s not exactly news, but the venerable Farmers’ Almanac (https://www.farmersalmanac.com/forthepress/uspressrelease.html) has been predicting a cold 2006-07 winter since late August (see Daily GPI, Aug. 31).

Monday’s big rebound in the physical market occurred without any support from the screen’s 12.3-cent drop Friday. However, cash numbers will have plenty of backing Tuesday after the November natural gas futures contract jumped by 78.5 cents Monday.

A smidgen of air conditioning load is starting to return in the South with Tuesday highs in the 70s and 80s predicted for most of the region and even some 90s due in South and East Texas. Both the Northeast and Midwest have seen quite a bit of moderation since last week’s blast of cold, but overnight mercury levels are still fairly low. Meanwhile, ski resort operators in the mountains of Utah, Colorado and Wyoming are heartened by the early-season snowfalls that indicate an active season approaching. A polar air mass is taking western temperatures as low as the 20s in the upper Rockies, while highs will reach the 80s Tuesday in southwest Arizona and far southeast California, The Weather Channel said.

A trader who markets gas on behalf of several independent Gulf Coast producers said she had just returned to the office from several days of business travel and was “shocked” to see how much prices had gone up Monday. It just shows that all it takes is some cold weather outlooks to boost this market, she commented. She recalled having read the Farmers’ Almanac forecast for a cold winter and said, “The Almanac is as good a forecaster as any.” She expects Monday’s screen spike to keep cash prices on the rise Tuesday.

A western marketer thought a cash/futures convergence attempt may have played a part in Monday’s cash rally, although he acknowledged that the Henry Hub increase of nearly 85 cents Monday closed the Hub-screen spread by only about a nickel and still left a gap of about $1.30. At least the Nymex strength means people haven’t give up on winter weather, he said. The marketer also said traders might have suspected that cash had gotten oversold, noting that to him cash prices had “seemed artificially weak” for the weekend.

Still, he found it difficult to understand how much of the western market kept up with the overall rally. Storage injection space remains very scarce in the region, he pointed out, and OFO-like constraints were still in place on CIG, Questar and PG&E.

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