Winter storms and an OFO caused big price jumps Monday in the West, while freezing low temperatures in the Upper Plains and Midwest helped generate sizeable gains there and in the Midcontinent supply area. Elsewhere in the market numbers were mixed but mostly lower as the near-term forecasts remained relatively moderate for the end of December.

The West is where most of the serious weather is currently, and it showed up in upticks as high as about 50 cents at Sumas and Stanfield. Other regional price advances were generally in the range of 15-50 cents, although the Permian Basin/Waha combination was essentially flat, largely due to fairly light intrastate Texas heating demand.

Not only did the western market get an extra boost from a low-linepack OFO on El Paso, but Transwestern reported it also was having linepack problems because of wellhead freezeoffs hampering receipts (see Transportation Notes).

Prices were quite volatile after late run-ups, a western marketer said. She saw ranges of as much as 45 cents at Waha and about 20 cents each for Transwestern Permian and the Southern California border. Despite the OFO and freeze-offs, she was a bit puzzled by the degree of the late strength, saying an abundance of storage in the region should have dampened any spikes.

“I guess there were some traders who were willing to pay a high premium,” a western utility buyer said of the region’s big price hikes. She felt lucky to have gotten most of her company’s purchases done early “on the cheap side.” However, temperatures in the Northwest should be on the rise later this week, she said, “so I’ve got a feeling that western cash prices have spiked and will return to more normal levels,” possibly as early as Tuesday.

In contrast to the rising trend in the West, a producer said Henry Hub came off a little towards the end after trading mostly flat on the day. “I saw traders working mini-plays all day as the Hub floated back and forth. Mostly, though, it was rather uneventful in the Gulf Coast,” he added.

Most of Monday’s larger declines of up to about 15 cents were in the Gulf Coast and Northeast, which shared daily high temperatures that were mostly in the 50s (along with some 60s in parts of the Southeast).

A Midwestern utility buyer had no swing numbers to report, saying he was using the company’s storage inventory to settle up pipeline imbalances through the end of the month. And although temperatures were in the 30s, he didn’t consider weather demand as being “all that great,” saying it was still a few degrees above normal for this time of year.

The combination of a screen fall exceeding 20 cents on the January contract’s expiration day, forecasts of relatively moderate weather in much of the U.S. into the first day or two of January, and the industrial slowdown that typically accompanies the end-of-year holidays should have most points falling or struggling to stay flat Tuesday, one source said.

As traders pressed to begin winding up bidweek business, a utility buyer in the Midwest said he had indexed his few January purchases and would rely on storage for the rest of his needs. “We already know what the value of our storage gas is from last summer’s prices, which were pretty high,” he commented.

According to a producer, several trading partners had mentioned they were going to rely on more index deals over the month to keep from exposing themselves to risk. He hopes the indexing tendency doesn’t grow much greater, saying, “Too much index trading is like a dog chasing its tail.”

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