While the cash market seemed able to ignore Tuesday the fact that serious winter weather was starting to spread in most market areas outside the Southeast, it apparently was taking full cognizance of the situation Wednesday. The result was Tuesday’s mild softness yielding to Wednesday gains that ranged from a nickel to 16 cents but were mostly around a dime.

A far-ranging swath of winter storms and/or frigid temperatures was blanketing much of the U.S. from the desert Southwest through the Rockies, Midcontinent and Midwest into the upper reaches of the Northeast. The system had even produced the almost-unheard-of event of a snowfall Tuesday in the Los Angeles beachfront suburb of Malibu.

The South has escaped much of the wintry wrath so far, to the extent of some locations recording date-specific high temperature records earlier in the week. There have been reports of air conditioners being turned on from Texas through Florida. However, the southern balminess won’t last, at least in western parts of the region, as the front that was turning Kansas and Missouri into sheets of ice over the past couple of days proceeds southward and eastward.

The severe weather in the Upper Midwest prompted Northern Natural Gas to extend a low-linepack OFO for all market-area zones into its third day today.

A trader in the New York City area jestingly dismissed the Northeastern cold front as market hype, saying Wednesday afternoon, “It’s very mild here. There’s never going to be any cold weather around NYC again.” He could afford to make wisecracks because while conditions were quite nasty in upstate New York, the bad weather had not reached the Big Apple at that point.

There was no denying, though, that Northeast citygates were up a dime or more Wednesday. One buyer suggested that part of it was due to Transco having declared cash-out prices Tuesday that were well above current swing numbers. “I think some people were playing games with the cash-out to push up prices,” he said.

A Rockies trader said regional prices, especially at Opal, got a little extra boost from Jonah Field maintenance that is expected to reduce Opal Plant tailgate by about 100 MMcf/d today only (see Transportation Notes).

Sources tended to discount the likelihood that Wednesday’s rally can be sustained. They allowed that prices could firm a bit further in today’s initial trading for the February aftermarket, but expect Friday’s weekend activity to begin an extended period of softening. “This thing [market] is going to try and go up tomorrow [Thursday], but I kind of doubt it has any staying power,” a Texas-based marketer said.

AGA reported 111 Bcf in storage withdrawals last week. The volume was within the range of prior expectations, said another marketer, but the fact that it represented a resumption of the year-on-year surplus rising is likely to be considered bearish.

February business picked up on the penultimate day of bidweek, but fixed-price quotes remained on the thin side. An East Coast utility buyer had only two fixed prices to offer for all of bidweek, explaining that his company will be pulling heavily from storage next month.

A Rockies utility buyer quoted a CIG baseload purchase in the mid $1.60s. Noting that swing prices on CIG were in the mid $1.80s Wednesday, he said, “I guess I can expect a drop of about 20 cents [today].”

A Midwest-oriented marketer said Chicago basis had peaked around plus 3-3.5 cents, but with the futures run-up Tuesday on the February contract’s closing day, it had fallen to plus 2, plus 1 “and then flat.” Similarly, he said, MichCon basis had closed out at plus 3 cents after previously having been as high as plus 5.5-6 cents. He quoted fixed-price MichCon deals at $2.02-03.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.