Spikes

Triple-digit gains at most of the Northeast citygates led an overall cash market advance Friday, as forecasts indicated little let-up this week in the severe winter conditions occupying much of the eastern two-thirds of the U.S. and Canada.

Spikes of a quarter or more were common at eastern points Thursday morning, as the cold weather that had failed to avert general softness on Wednesday recovered its price-supportive powers in a big way. The shivering Northeast led the way with gains of up to nearly 70 cents at Transco Zone 6 non-NY, although New England points were comparatively somewhat weak. Western upticks tended to be smaller than those in the East, although such markets as Waha, Permian Basin, San Juan Basin and Sumas rose by about 30 cents or more.

Northeast citygates soared Monday, topping out at $9.00 in New England. That seemed natural, considering that the Northeast and Midwest were experiencing their worst siege of cold so far this winter, and chilly temperatures dominated most of the weather picture elsewhere.

Looking at sharply higher Northeast prices by themselves, an observer would conclude that Thursday was a rampaging bull market for cash gas. But in the overall market context, non-Northeast quotes ranged from a few pennies higher to as much as 10-15 cents down at some western points. Either side of flat was the rule for a majority of the market.

Prices rose across the board Wednesday between about a dime and 30 cents in most cases, fueled by the approach of cold fronts in the Northeast and Midwest and feeding somewhat off the previous day’s screen gain of nearly 20 cents. New England citygates were overachievers with upticks approaching half a dollar.

A week-long period of steadily rising prices at nearly all points, including a few spikes along the way, came to an end Tuesday. Prices tended to range from either side of flat at San Juan Basin and Pacific Northwest points to loosing 30-40 cents or so at Northeast citygates. Many points in the Gulf Coast and Midcontinent/Midwest fell between 20 and 30 cents, or approximately the same amounts by which they had risen the day before.

While the western energy moguls slept, AMP took over for California’s electric transmission grid operator, CAISO, as an automatic screening agent to throw out any anomalous wholesale electricity bids into its real-time balancing market. It came one second past midnight Wednesday morning, ushering in FERC’s $250/MWh soft cap, but using the $91.87/MWh old cap as the heart of the three-step screening process. AMP stands for “automated mitigation procedure.”

Capping a tumultuous tenure as prompt month, the October contract went out with bang Thursday as two distinct waves of buying were more than sellers could handle. After ratcheting higher throughout the late morning following the news that 67 Bcf worth of gas was injected into storage last week, the prompt month dove lower in the afternoon. But just when it looked as if October would drop below the critical $3.50 mark, market-on-close buyers stepped in. That support, combined with an absence of willing sellers, sent prices through the roof in the last 30 minutes of trading. October settled at $3.686, up 19.2 cents for the session and 26.6 cents above where it was when it took over as prompt contract at Nymex a month ago.

It was hard to tell from mostly moderately lower cash prices Monday that a huge amount of gas had been taken off the Gulf Coast market, especially since Gulf and Northeast points tended to see the lion’s share of declines. The storm-induced offshore shut-in volume was expected to grow as the week wears on, so in consideration of great strength in the energy futures complex Monday, sources felt confident in predicting soaring prices Tuesday in most markets.