Most cash points rose 1 to 5 cents yesterday on the strength ofa futures rally fired by a bullish American Gas Association storagereport. Traders were in agreement that prices were flat toWednesday until the futures screen picked up in the late morning.

“If you traded early, you could get flat prices, but once thefutures screen started rolling, both the Gulf Coast and theNortheast moved upward hand-in-hand,” a Northeast buyer said,adding that Transco Zone 6 (NY) recovered from Wednesday’s drop totrade in the low $2.90s Thursday. The Henry Hub finished in thehigh $2.60s, while the Tennessee 500 and 800 lines traded aroundthe $2.60 level.

The western market “remained a dog,” one trader said, because ofvery lackluster trading activity. The Southern California Bordertraded at only a dime premium to El Paso Permian. She added thatelectricity prices did not do much better and it is almost to thepoint where it is not economical to use gas for generation.

” If you take a California Border price of $2.65, and add 50cents to get it to the burnertip, you would have to sell yourelectricity for $31.50 MW. However, clearing prices on theCalifornia PX for tomorrow are only $26.50 MWh,” she said.

A capacity constraint on Northwest’s system caused Sumas toweaken by a penny or two Wednesday, a Rockies trader said. Incontrast, Blanco stayed flat in the low $2.30s. “Loads north ofSumas have been small lately, and people are over-nominating,” thetrader explained. He added that Sumas prices should start risingnext week, because of the planned maintenance of BC Gas’ West Coastsystem, which should withhold 450,000 Dth/d. “This yearlymaintenance not only will raise Sumas prices in the middle of themonth, it also was responsible for Sumas’ August index to be higherthan it should be,” he said.

A Midcontinent trader said utilities were very active in thespot market Thursday because they avoided long positions whenprices were strong during the last bidweek. He also pointed to thestart of the harvest season and the firing up of agriculturalprocessing plants as another reason for Midcontinent pipes gainingup to a nickel.

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