Colder

In a textbook example of why traders eschew short positions heading into a holiday weekend, natural gas futures erupted higher Tuesday, as a combination of fund and local buying drove the market up 9% to match recent highs. After gapping higher at the open, the March contract wasted precious little time yesterday as it moved above its 40-day moving average in the first 10 minutes of trading. Buyers did not once look back, boosting the prompt month to its highest close since Jan. 2, up 19.1 cents at $2.397. At 111,562, heavy estimated volume served to punctuate the price move.

Despite a firmer screen and spreading intensification of colder weather, swing prices ranged from flat to down a little more than a nickel Tuesday. A majority of points recorded small losses of 1-3 cents.

Colder temperatures that moved into the central and eastern United States over the extended holiday weekend should stick around for another two weeks, according to Salomon Smith Barney meteorologist Jon Davis.

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.

Was that a little extra nip in the air? Traders apparently felt it Tuesday as, with a little prompting from a moderately higher screen, they sent cash numbers rising by as much as the low-teens, although a large majority of the upticks were less than a dime and a few small declines were thrown into the mix.

TECO Energy reported late last week that higher commodity pricesand colder weather are the primary reasons it expects to exceedconsensus earnings forecasts for the first quarter. TECO forecaststhat it will beat First Call’s consensus of $0.46 per share byexceeding $0.50 per share, more than 15% higher than the sameperiod last year.

Traders cited new forecasts of colder weather, both near-termand intermediate-term, as the chief instigator of yet anotherreversal in cash market direction Thursday. Nearly all pointsrecorded strong gains between about a quarter and 60 cents.California was the conspicuous exception with further largedeclines, but it remained the most expensive market by far.

Generally the cash market failed to find any support from eitherAGA’s big storage withdrawal report Wednesday afternoon or thescreen’s strong push upwards Thursday. With the exception ofupticks at a few scattered points, cash numbers ranged from flat todown nearly a dollar at Transco Zone 6 (NYC). Most of the declineswere between about a nickel and 30 cents.

Due to forecasts of colder than normal temperatures in theKansas City metropolitan area, Williams implemented an OFOSaturday. The OFO was to remain in effect though Monday’s gas dayor until further notice.