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Most Points Rise, With Chicago Joining NE in the $10 Realm, But Upward Momentum Slows

With cooling demand starting to wane in parts of the West and North, Friday's continuation of price hikes at most points were based mostly on two previous days of screen strength, although power generation load remained fairly substantial overall. Reflecting the moderate weakening of weather fundamentals and the drop in industrial demand associated with a weekend, Friday's upticks were smaller than Thursday's, and a few Midcontinent and Rockies points were flat.

The instances of flatness notwithstanding, weekend price gains ranged from a couple of pennies to nearly 35 cents. Despite area highs sinking into the low 80s Friday and Saturday, the Chicago citygate peaked at an even $10, and the two Appalachian pipes, Dominion and Columbia Gas, hit $10.03 and $10.05 respectively. Meanwhile, Northeast citygates all averaged well above $10.

One source said the current theme of energy futures markets seems to be, "Fear Factor is not just the name of a television show." The natural gas screen added nearly 30 cents to settle just shy of $9.60 Friday, while Nymex's crude oil and unleaded gasoline contracts again established records for prompt months. New refinery glitches were piled atop existing supply worries to drive crude for September delivery a little more than a dollar higher to a daily settlement of $66.86/bbl, which was within shouting distance of the new all-time intraday peak of $67.10.

Although analysts continued to warn of superheated energy markets being a "bubble" just ripe for popping, no one could say definitively that a top has been reached yet.

One thing that had seemed to have the potential for partially deflating the cash gas "bubble" is Tropical Storm Irene, which was nearing hurricane strength Friday afternoon as it passed about 295 miles southwest of Bermuda and was about 650 miles southeast of Cape Hatteras, NC, according to the National Hurricane Center. However, whereas earlier Friday the agency had projected that Irene would be approaching the Mid-Atlantic coast with its cooling heavy rains by Monday morning, by afternoon it was predicting a northerly turn for the storm that would keep it well out to sea.

Cold fronts dipping south from Canada were due to bring some relief from the heat for most of the northern tier of states over the weekend. However, conditions would remain hot and sticky ahead of the slow-moving fronts. In fact, an excessive heat warning was issued for Saturday across the Philadelphia metropolitan area, The Weather Channel (TWC) said.

The effects of the cold fronts would be most pronounced in the Rockies, possibly even inducing the restart of a few furnaces. Highs in much of the Rockies would only be in the 50s Saturday, according to TWC.

A Midcontinent/Midwest marketer said she was sure that some of her customers were getting "sticker shock" from recent super-high prices. Chicago was expected to get a little cooler during the weekend, yet citygates still rose nearly a quarter, she noted. Cash quotes did come off a little in late trading Friday, she said. However, prices "probably" will keep going up Monday since the screen was much stronger again Friday, the marketer added.

A Florida utility buyer said her company was "just coping with the heat" (mid 90s Friday) and supplies were getting tighter on Florida Gas Transmission, which prompted the pipe to keep tightening its imbalance tolerance for an Overage Alert Day notice (see Transportation Notes).

Citigroup analyst Kyle Cooper said his initial estimation for the upcoming storage report "looks for a build probably near 50 Bcf. However, our final estimation may be dramatically different as early indications are indicating a very wide range."

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