Post-Holiday Prices Up, But Softening Expected Today
The cash market emerged from the July 4 holiday weekend with a
strong performance in which prices ranged from flat at some points
in the Gulf Coast and Midcontinent to nearly 20 cents higher in
California. The West made a remarkable recovery from last Friday's
steep dives, reclaiming nearly all of the ground it had lost. A
heat wave over the eastern third of the U.S.-especially acute in
the Northeast-kept prices firm in the producing and market areas.
The market strength wasn't expected to last, however. The Henry
Hub futures contract for August waited until after the bulk of cash
trading was finished before making most of its near-dime plunge
Tuesday, but it was carrying late cash quotes down with it in
almost every market, sources said. In addition to the negative
screen influence, a cooling trend due Tuesday night in the
Northeast will erase a significant amount of power peaking load
today, they said. A fall in high temperatures from 100 degrees to
90 degrees may not seem like all that much, said an official of a
Northeast power grid operator, but it likely will eliminate most of
the strain that many area power utilities labored under Tuesday.
The PJM [Pennsylvania-New Jersey-Maryland] Interconnection
implemented a 5% voltage reduction across its system that was still
in effect as of late Tuesday afternoon. PJM earlier had warned of
the possibility of rolling blackouts, but none were necessary,
according to a spokeswoman. Tuesday's unofficial PJM peak load was
around 52,000 megawatts, she said, breaking the previous record of
49,406 megawatts set July 15, 1997.
As it did last week, ISO (Independent System Operator) New
England had a Power Warning in effect Tuesday in an effort to
reduce consumer electrical demand. In addition, numerous electric
utilities throughout the Northeast issued customer appeals for
power conservation measures. Electric prices spiked in response to
the situation. PJM numbers for today's transmission were in the
$115-150/MWh range, a marketer said, compared to $30-35 averages in
recent weeks. He and another source confirmed that $850/MWh was the
going price for intraday PJM juice Tuesday. Northeast citygate
prices for gas were up about a nickel into the low $2.60s, which
seemed puny in comparison to the power market. There was also a
premium for intraday gas, but it was small. One trader reported an
intraday Transco Zone 6-NYC deal at $2.68, only 3 cents over his
average for next-day flow.
A marketer who was able to sell Northern Natural field gas at
Waha for $2.26 early, said the later drop into the $2.10s was so
precipitous "that we 'hid' 3.5 MMcf/d rather than sell it."
Double-digit increases were the order of the day at many Western
points. The Southern California border and PG&E citygate
rebounded from Friday's debacle into the low to mid $2.40s and high
$2.50s respectively. SoCal Gas no longer had an Overnominations Day
in effect, one trader said, and although PG&E had a
high-inventory OFO in effect Tuesday (see Transportation Notes), it
was not extended into today. Quotes for San Juan Basin and Rockies
pipes, spurred by the renewed power generation demand in California
and east-of-California markets, climbed back into the neighborhood
of July index levels.
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