Prices soared at virtually all points Monday after a frigid mass of air from Canada had invaded much of the U.S. and sent temperatures plunging, even in the previously mild South. Some Northeast citygates led the price climb with gains around a dollar or more, and most other points rose by at least half a dollar.

The smallest increases occurred in the West, which is actually in a moderating trend after having been the coldest market area for most of the heating season through last week.

The extensiveness of the newfound heating load in the East was exemplified in Houston, where a rare freezing overnight low of 30 degrees was forecast for Tuesday. In fact, freeze warnings in the South extended from southeastern Texas to the Carolinas, according to The Weather Channel. Further indicators of rising Southern heating load came from an OFO Type 6 being implemented by Sonat and the warning of a potential Overage Alert Day notice by Florida Gas Transmission (see Transportation Notes).

Also, Columbia Gas said Monday afternoon it was providing shippers “with as much advance warning as possible of the conditions that may create an Operational Flow Order…and of the anticipated duration of such an OFO.”

Naturally, when the South is cold that almost always means it’s downright frigid in the Northeast and Midwest, where lake-effect snows were expected to continue in both regions. A low of 21 degrees was predicted for Tuesday around New York City, while Chicago was expected to drop to around 16 degrees.

Even with the record amount of storage stashed away this year, there’s enough demand for swing gas to send prices soaring, commented a Gulf Coast producer. For one thing, there’s only so much storage deliverability and it can’t handle all the load during a cold snap like this, he said. Also, “maybe buyers are a bit scared” remembering those spikes to $50 and more in the market area last January (see Daily GPI, Jan. 15), he said. With its rise of 32.3 cents, the screen was making sure that Monday’s cash run-up continues Tuesday, he noted.

Forecasters are projecting about 5 degrees below normal in the lower Northeast this week, which would be a deviation of 10-15 degrees from where temperatures were last week, the producer continued. Transco Zone 6-NYC ran as high as about plus $1.30 during bidweek, he said, and on Monday the physical Henry Hub-NYC spread was about $1.35. Since it’s due to get even colder in the Northeast over the next couple of days, ” it will be interesting to see what basis does Tuesday,” he concluded.

One source observed that long-elusive convergence between cash and screen numbers was being achieved to some degree Monday, with Henry Hub’s gain of a little more than half a dollar to the high $6.80s leaving it only about 30 cents behind the Nymex settlement at $7.166.

A marketer who trades the Chicago citygate reported “no trouble at all” finding buyers. Quotes came off a little in later deals, and usually that’s a good indicator of next-day price movement, he said, but agree that the futures strength will keep cash rising Tuesday. He suspected in this case that some people ran the Chicago price up early on without being totally aware of market conditions, and then other traders later on decided that delivered gas wasn’t really that valuable.

Lehman Brothers analyst Thomas Driscoll expects a storage withdrawal of 65 Bcf to be reported for the week ended Dec. 10. Citigroup’s Kyle Cooper said his final estimation for the report looks for a draw of 58-68 Bcf. Cooper noted that looking forward, “the week between Christmas and New Year’s appears [to be] the first opportunity to significantly reduce the storage surplus to the five-year average.”

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