More than one trader was more than a bit surprised at the price run-up in most markets Tuesday in two-day deals covering the Fourth of July holiday, which normally is considered one of the lowest demand periods of the year. Only Rockies/San Juan/Pacific Northwest points and a few Northeast citygates softened, in contrast with numbers elsewhere that ranged from flat to about 15 cents higher outside California and gains at California points that exceeded half a dollar.

A Gulf Coast producer expressed amazement not only at how firm the midweek holiday market was but also that prices “were screaming [higher] near the end.” His ANR Southeast sales, after starting the morning in the high $2.80s, hit the mid $3.00s in the day’s last deal. “It makes you wonder what it will be like next week when we’re back to ‘normal,’ so to speak,” the producer said.

A Northeast-oriented marketer tended to agree. Weather demand in the region “is just dead for now, but I see potential for some pickup next week,” he said.

Tuesday certainly wasn’t the typical holiday trading period in which prices tend to trail off in late activity, a couple of sources said. A moderate screen rise gave cash a boost early on, one continued, “but I think the run-up was due more to storage buyers picking off their supplies early, and then the physical buyers who absolutely had to have the gas paid up near the end.”

It’s very hot in California, “and the gas load showed it,” a western trader said. The state was in a second straight day of Stage One and Two Electrical Emergencies Tuesday, which meant that every gas-fired peaking power unit that was operable was being called upon to contribute. Border-SoCalGas and Malin made very strong gains as a result, but they were topped by the PG&E citygate’s dollar-plus rise. The state buyer, the Department of Water Resources, said some of the power shortfall was because of confusion over how to figure FERC’s recently-installed western power market clearing price once an emergency alert kicked in. DWR said some generators were withholding power because they didn’t know how much they would be paid (see related story, this issue).

El Paso extended a low-linepack OFO into its third day Tuesday, but one source said that had relatively little impact on the California market in comparison with the heat and its associated air conditioning demand.

A marketer thought it “kind of amazing that PG&E could have a super-stringent high-linepack OFO on Sunday, and then two days later be projecting that linepack could soon hit the bottom-end red zone” [below minimum linepack target levels].

A tropical disturbance in the vicinity of the Bahamas was expected to bring rain to the Florida peninsula Wednesday but was not considered a threat to Gulf of Mexico production. Otherwise the Atlantic basin continued to see no storm activity.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.