One might have thought much of North America was under a blizzard watch, judging from strong post-holiday gains Tuesday in the cash market and an even stronger screen performance. Instead, traders apparently were looking beyond this week’s continuing mundane weather fundamentals to new forecasts of something the market hasn’t seen a whole lot during this heating season: a seriously bad blast of winter next week.

A majority of points managed to achieve double-digit gains, but not by much; most of Tuesday’s advances tended to be within a range of 10-15 cents. Florida citygates surpassed the rest of the market with an increase of 20 cents into the mid $2.60s, while Algonquin citygates lagged just a couple of cents behind at $2.63. Transco Zone 6-NYC only rose 2 cents, allowing neighboring Northeast points Iroquois Zone 2, Texas Eastern M-3, Transco Zone 6 (non-NYC) and Tennessee Zone 6 to catch up with it in the high $2.50s.

It certainly was hard to imagine pegging the price hikes to midweek weather. The Rockies/Pacific Northwest had the closest thing to a real winter storm approaching, yet that region recorded some of yesterday’s smaller advances. Parts of the Midwest and Northeast are due to see blustery conditions, but otherwise will continue to experience above normal temperatures.

There must have been some storage injection buying going on as people stock up for next week, a marketer said. He noted that the National Weather, Service, EarthSat and meteorologist Jon Davis of Salomon Smith Barney had weighed in with forecasts for what could be the coldest period of the 2001-02 winter starting next Sunday for most of the central half of the U.S. “You might think it would be jumping the gun to start laying in gas several days in advance, but a little bit of panic buying seemed to set in,” he said. Other sources pointed out that packing the pipe in the producing area now would translate to deliveries in the northern market areas three to four days later. To the marketer, it was very significant that Henry Hub physical gas traded flat to 2 cents behind the screen at times Tuesday, “which is something we haven’t seen in quite a while.”

An additional factor feeding the new surge of bullishness was the possibility that this afternoon’s AGA report could show the first reduction of the year-on-year storage surplus below the psychologically key level of 1 Tcf, a marketer said. Indeed, analyst Thomas Driscoll of Lehman Brothers was projecting an AGA figure of 115 Bcf, which (if realized) in comparison to the year-ago pull of 81 Bcf would leave the surplus at “only” 981 Bcf.

Referring to the new six-to-10-day forecasts as having “real potential,” a Gulf Coast producer added that this could be the last significant cold of the season. “The upticks were stronger than I thought they should be based on weather. I personally give more credence to the recent drops in rig count.” However, the forecasts indicate what could be the coldest sustained weather of the season in the Northeast and Midcontinent/Midwest, “so I suppose the other markets ran up with them out of envy,” he said.

A Northeast buyer noted that Transco-delivered gas in the New York City area, despite being one of the smallest gainers Tuesday, was still about a quarter above Station 65 numbers. With the pipeline’s variable costs from Station 65 to Zone 6 running 12-13 cents currently, “we transported as much as possible and bought the rest at the citygate,” he said.

Everybody’s got their bull caps on and running the market up, commented a Calgary-based producer. “Traders must have had their binoculars on” Tuesday in focusing on next week’s weather, he went on. “We’re kind of split here in our group. I’d be gun-shy of going too long; I sure don’t think people would want to hold a long position for any extended time.” It could be a more interesting March bidweek than some people expected with highly fluctuating basis, the producer concluded.

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