Fulfilling NGI sources’ predictions, the cash market was able to shrug off Tuesday’s significant softness and post rebounds at all points Wednesday (see Daily GPI, Aug. 10). Increasing power generation load in the Northeast more than offset cooling trends in the Midwest, and high temperatures continued to dominate the weather picture in the South and most of the West.

If you liked Wednesday’s market action, get set for some awesome trading Thursday. Inspired by yet more record-setting pricing in crude oil futures, the natural gas screen rocketed 42.2 cents higher Wednesday to a $9.071 daily settlement. That practically guarantees further strong gains by physical gas Thursday, traders said. Some delivered prices in the Northeast are expected to approach $11.

Wednesday’s cash gains were as low as about a nickel, but a large majority were in double digits in ranging as high as about 35 cents. The advance was fairly evenly spread across geographic market areas, although Northeast citygates tended to see most of the largest increases.

Although some analysts claimed that oil futures traders were being somewhat irrational in their supply worries, it didn’t stop crude oil for September delivery from hitting an all-time intraday peak of $65/bbl before settling not much lower, up $1.83 to a record prompt-month daily settlement of $64.90.

In addition to strong power generation demand in most areas, storage expectations likely contributed to renewed gas bullishness. Most guesses about the storage report to be released Thursday morning centered around 40 Bcf, which would seriously lag in comparison with past inventory builds and further cut into the current surplus at a time when there is still plenty of summer heat left and the most active part of the hurricane season has just begun.

That was “an unreal screen,” commented a Northeast marketer. “It makes me think it must be January” instead of summer, he said, adding that there’s no doubt Wednesday’s futures spike will translate into more big cash gains Thursday.

There were some rains forecast that the marketer had thought would cool things off a bit in the Northeast, but most didn’t show up and generation load was coming on strong. He was hearing of some issues on Iroquois that would cause a meter outage starting Thursday, further exacerbating regional supply problems. He reported seeing late-afternoon bids of $10.50-75 at the Algonquin citygate, which made him confident that the market will experience $10-plus gas Thursday in the Northeast.

“It certainly won’t be boring for us,” he continued. He recalled lengthy quiet periods in the market last summer, when he often would able to leave the office at 3 in the afternoon for golf. Not so this summer.

Noting that the Ontario grid operator extended a “Power Warning” into a second day Wednesday (see story in Power Market Today) while Northeast electric utilities have not been having the system-straining record sendouts of the previous couple of weeks, another trader explained that the province’s main problem is constraints on getting imported power. It needs both more import transmission lines and more on-grid generation, he said.

Saying the current gas market is “out of control,” a Midwest marketer confirmed that she continues not to buy any gas “at these prices.”

Analyst Ron Denhardt of Strategic Energy & Economic Research projected a storage injection of 40 Bcf for the week ending Aug. 5. “LNG imports for August are now expected to average 1.3 Bcf/d versus 1.9 Bcf/d last August,” he continued. “Prices could moderate some with more moderate temperatures this week, but with forecasts of well above average hurricane activity a substantial break in prices does not seem likely.”

The National Weather Service predicts above normal temperatures during the Aug. 15-19 workweek in all the West Coast states along with all of Nevada and western Idaho and northwestern Arizona. It also looks for above normal readings east of a line running southwestward from northern New Jersey through southeastern Louisiana. The agency forecast below normal temperatures in a large section of the central U.S., anchored at the bottom in West Texas and eastern New Mexico and expanding northward through western Montana to the west and through the Midcontinent to the east into the Upper Midwest and also including northern New England in both directions

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