Points

Western markets rejoined their counterparts in the East as all points registered double-digit gains Monday that were mostly between about 15 and 30 cents. The source of the price strength remained a mystery to several sources who contended that fundamental weather demand was not that heavy outside the Upper Plains, Pacific Northwest and Rockies.

As expected, the cash market was moderately softer for nearly all points Tuesday. The lack of weather-related load in most regions, declines in the major energy futures contracts and the heavy burden of burgeoning storage inventories left prices unable to sustain what one trader had deemed a largely “artificial” rally Monday.

This week’s price rally ran out of steam Thursday with nearly all points declining in double digits. Traders anticipated a moderation of the blast of winter that had invaded most of the nation except for the Southeast and Mid-Atlantic states, and also noted considerable weakness in the natural gas, crude oil and heating oil futures contracts.

The downtrend continued Monday morning at the majority of points, with many places down a more than a dime from Friday averages. However, there was a late turnaround in some regions, including West Texas, the Midcontinent, Gulf Coast and Northeast markets, which may set the tone for trading Tuesday and Wednesday until the AGA storage report is released. Despite plenty of time to prepare last week, the colder weather appears to have caught some players off guard.

Last week’s market rally was starting to fade in trading for the weekend. Eastern points were mixed Friday, with price movement both up and down, but trending largely toward the downside, while the West was solidly in a softening mode with considerably larger declines.

Cash prices registered gains Wednesday that were between 15 and 25 cents at nearly all points. Colder weather moving into the Midwest was the primary eastern driver, a Midcontinent marketer said. However, another trader said heat in California was more responsible for the western upticks.

The October aftermarket was dividing along geographical lines as it began Friday. Eastern points fell off sharply from both first-of-month indexes and end-of-September levels. However, except for mild Permian/Waha softness, the West was realizing gains in both of the aforementioned cases. Sources attributed the relative western firmness largely to the region’s having a near-monopoly on any hot weather remaining in the U.S.

Amid a stunningly bullish one-two combination of a tropical depression and a record low storage refill for the month of August, natural gas futures soared higher to test one-month highs yesterday as traders covered shorts initiated on recent moves below the $3.00 mark. The September contract rode the buying wave for a 37.4-cent advance, breaking through several levels of resistance on its way to a $3.468 closing price.

Price movement ranged from essentially none to nearly a dime higher for most points Thursday. Small declines at Northeast citygates and larger ones for the PG&E citygate and California border-SoCal gas were the exceptions in one direction, while upticks of 15-20 cents or so more for Malin and intra-Alberta broke the pattern in the other direction.