Spikes

Prices made rebounds across the board Monday from the weakness of the long weekend market. Traders cited expectations of hotter weather, a big nuclear outage in the West and screen firmness Thursday that continued Monday as factors in the rally. One suggested the initial Gulf of Mexico activity in the still-young Atlantic hurricane season may have added a small psychological boost.

No movie was involved, but “The Big Chill” descended on the Northeast Tuesday and sent delivered prices in New England skyrocketing as high as $30. Outside the Northeast, the market was decidedly mixed around flatness with numbers ranging from a quarter down to half a dollar higher.

The price fires got reignited Thursday in the shivering Northeast, only a day after early-week spikes had appeared to be settling down for the most part. Transco Zone 6-New York City prices topped out at $17.50 in super-volatile trading that saw the same point quoted at less than $9. Other Northeast points saw triple-digit gains in a few cases.

Even with the overall market making a sharp reversal Wednesday from the price spikes of the first two days of the week, New England citygates pushed to new highs as severe winter weather continued to intensify. The Algonquin citygate hit $12.00 at its high end in very volatile trading, while Iroquois Zone 2 and Tennessee Zone 6 peaked at $11.60 and $10, respectively.

After beginning 2004 with unusually mild weather in the East, the cash market turned around rapidly Monday as the Midwest joined most of the West in experiencing winter storms, with the Northeast poised to take its turn Tuesday. Prices responded to the anticipated cold snap with across-the-board run-ups of about 60 cents or greater.

Tuesday’s across-the-board spikes in swing prices for the last day of 2003 had some traders, especially in the East, scrambling to find drastically revised weather forecasts that would help justify such a run-up. While there is a more ominous forecast for the eastern half of the country next week, most near-term predictions still indicated that unseasonably moderate temperatures would continue to prevail in the eastern two-thirds of the U.S. into the long holiday weekend.

While many gas market observers believe the recent price spikes have been significantly overdone, this does not rule out the possibility that there has been a legitimate tightening in the market, according to energy consultant Stephen Smith of Natchez, MS-based Stephen Smith Energy Associates. The federal government’s own long-term gas forecast released last week supports that conclusion (see related story).

While few gas market observers would disagree that the recent gas price spikes have been significantly overdone, this does not rule out the possibility that there has been a legitimate tightening in the market, according to energy consultant Stephen Smith of Natchez, MS-based Stephen Smith Energy Associates.

The cash market appeared to brush aside Monday’s second straight screen dive in registering gains Tuesday that were as low as a dime at a few western points, but most often ranged between a quarter and more than 60 cents.