Cold

In response to a stunningly bullish weather forecast for the last week of December, natural gas futures shot higher Monday morning as short traders elected to take their profits and head for the exits. As one might expect, the January contract received the biggest buying boost, etching a 17.9-cent advance to close at $2.747, its highest settle since becoming the prompt contract late last month.

Colder weather was coming into the Midwest and Northeast while starting to recede along the West Coast, and prices reacted Friday pretty much as one might expect given those conditions. The Southwest basins joined all eastern points in registering gains of about 20 cents or more in virtually all cases. Meanwhile, California and the Pacific Northwest ranged from flat to about a dime lower, while the still-snowy Rockies market was kind of in-between with increases ranging from a dime to a little over 20 cents.

In contrast to forecasts by the National Oceanic and Atmospheric Administration (NOAA) and Salomon Smith Barney of a colder-than-normal winter in key eastern consuming regions, WSI Corp.’s end-of-October update to its seasonal forecast for November, December and January predicts warmer-than-normal temperatures in the Northeast, Mid-Atlantic and in the central and southern Plains. WSI, however, said it expects cooler-than-normal temperatures in the Gulf Coast states, Northern Plains, Great Lakes states, and all areas west of the Rocky Mountains.

In contrast to forecasts by the National Oceanic and Atmospheric Administration (NOAA) and Salomon Smith Barney of a colder-than-normal winter in key energy consuming regions, WSI Corp.’s end-of-October update to its seasonal forecast for November, December and January predicts warmer-than-normal temperatures in the Northeast, Mid-Atlantic and in the central and southern Plains. WSI, however, said it expects cooler-than-normal temperatures in the Gulf Coast states, Northern Plains, Great Lakes states, and all areas west of the Rocky Mountains.

Severe heat and humidity in the Northeast last week led to record power demand and high prices in the region before a cold front swept through on Friday. The Pennsylvania New Jersey Maryland Interconnection (PJM), the New England Independent System Operator and the New York Independent System Operator all issued various alerts and requests for additional supply and conservation.

As many traders had expected, the moderation of cold weather ineastern markets and the screen’s expiration-day dive were enough todrive the late-March swing market sharply lower in nearly all casesThursday. Only new increases at the Southern California border andPG&E citygate defied the overall downtrend.

Prices emerged from the weekend flat to slightly higher or lowerMonday at nearly all points outside the declining California andRockies/San Juan markets. There probably would have been moreeastern softness, sources said, if weather in the Northeast andMidwest hadn’t exhibited more of a tendency to retreat back intowinter, rather than press forward into spring. Even the South wasseeing more chill than normal for this time of year.

Buoyed by cold weather expected to continue this week and comingon the heels of modest gains late last week, natural gas futuresshuffled higher late in the session Monday as traders took backearlier losses by pressing their long exposures. The April contractreceived the biggest buying boost, finishing 4.9 cents stronger at$5.322.

For the first time all week, all markets were united on the samerising price page Friday. The Rockies and scattered other pointswere among the few failing to gain about 20 cents or more. NorthernCalifornia led the surge with PG&E citygate upticks of nearly$2.