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.

Once again the West commanded the lion’s share of genuine winter weather, although some snow and freezing lows were being recorded in parts of the Midwest and Northeast. Some of the day’s largest advances of 60 cents or so occurred in the Rockies and Permian Basin and at Waha as El Paso extended a low-linepack OFO and the Midcontinent/Midwest market competed harder for Southwest supplies with California and east-of-California customers. However, Transwestern had lifted a bulletin board posting about wellhead freezeoffs.

The rest of the market wasn’t far behind as most points saw gains within a dime to either side of half a dollar. Northern California (Malin and the PG&E citygate) points tended to register the smallest upticks of about 30 cents; the PG&E utility did not issue an OFO but projected its linepack as bumping up against maximum target levels Wednesday and Thursday.

Noting that Calgary-area temperatures were around minus 10 degrees C. Tuesday afternoon and slated to sink to minus 20 that night, a producer commented, “We have enough weather to justify higher prices, but I have no idea why the eastern markets are so strong.” He wondered if there might be a “little bit” of lingering fears about storage being adequate for this winter’s needs. The producer said he had “talked to one guy who was buying Malin and selling intra-Alberta.” That trader essentially came out even on the basis differential between the two points, but was making money by not paying the transportation cost, according to the producer.

He jested that “we’d like to share our cold-weather misery with the rest of the market” because that would keep prices strong. He reported doing no baseload business for January, explaining, “We’re very bullish on January prices, so we’ll go the swing route all month.”

But to a Northeast utility buyer, prices should have been going down Tuesday instead of up because “it’s actually kind of warm” when you consider that we’re solidly into the winter heating season by now. Her company consults two forecasting services that were calling for highs in the 40s and 50s for the first few days of January, so she was unable to detect any fundamental support for Tuesday’s soaring prices. The buyer noted that futures had taken a large dip Monday and their big rebound Tuesday had little time to influence that day’s cash market, adding, “It seems like it suits the suppliers to follow the screen up, but not so much down.”

A Midwestern marketer was thinking similarly, telling NGI, “It wasn’t especially cold during my morning run, just invigorating.” Regional weather is due to get colder after Jan. 5, he said, but that raised the question of “why prices are spiking now instead of waiting till next Monday.” One sure sign of a relatively moderate early winter is that there’s no ice on many lakes in the Upper Midwest, the marketer added. He reported trying to buy gas Tuesday afternoon for Jan. 1-5 flows but not having any luck. He also there were some scheduling problems on the MichCon system that he thought were at the production end.

Weather 2000 still adheres to its prediction of very cold weather in the East not long after the new year begins. In a Tuesday advisory, the consulting firm said the period from Sunday through next Wednesday “should deliver some of the most bitterly cold air we’ve yet seen to the central U.S. early next week and then expand eastward, but deep southern penetration should be minimized. By keeping the sharpest cold concentrated away from the South, the resulting anomalies will be impressive indeed (even for January) with max[imum] temperatures 15 to 25 degrees below normal in the north-central U.S. with isolated areas registering 40 degrees below normal. Clouds and precipitation should be enough to keep the South cool, so we think the widespread ‘above normal’ outlooks for the South from NWS [National Weather Service] are erroneous.”

As January trading wound down to near-completion, an industrial end-user said he did all his January fixed-price deals before Dec. 23, which NGI defines as the official beginning of bidweek (last five business days of the month). “I think there was a lot of that going on, doing next-month business throughout December instead of waiting until the traditional bidweek,” he added.

A marketer quoted Michigan citygates for January in the mid to high $6.20s, or about 20 cents above last-of-December levels.

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