Although heat levels weren’t quite as intense or widespread as they had been a week earlier, power generation loads in much of the East and West were still substantial enough to have prices rising at all points Monday. Carry-over support from a 22.9-cent screen gain on Friday also contributed to Monday’s cash strength.

Nearly all of the advances were quite strong in ranging from 20 cents to a little more than 60 cents. However, Transco Station 45’s small increase of only about a nickel was an exception as significant constraints on Transco capacity upstream of Station 50 persisted.

Whether the start-of-week price bullishness can be maintained was in some doubt after September natural gas futures retreated by 1.6 cents Monday. It was one of those days in which the gas contract separated from oil-based spikes. Crude oil for September delivery skyrocketed by $1.63 to a new daily settlement record of $63.94/bbl after the U.S. closed its diplomatic offices in Saudi Arabia due to unspecified security threats.

However, withering heat continues to dominate most of the South and West as it did last week, and the Midwest was already warming up again into the low 90s after a weekend cooldown. The Northeast would experience another day of highs in only the mid 80s Tuesday before joining in the warming trend.

Although Colorado State University researchers have weighed in with yet another forecast of greater 2005 Atlantic hurricane activity than previously expected (see related story), the storm scene remained placid for Gulf of Mexico (GOM) producers.

Tropical Storm Irene formed over the weekend but was downgraded to a tropical depression Monday. It was considered a possible threat to Bermuda by next weekend but had virtually no chance of approaching the GOM. Much farther north, Tropical Storm Harvey continued northeastward toward extratropical waters more than 500 miles south-southeast of Cape Race, Newfoundland.

Although Northeast temperatures were milder than where they had begun the previous week, a producer who trades the region said there was still a healthy amount of power generation load to go around. “We’re still seeing PJM power prices over $100,” so fuel demand hasn’t receded all that much, he said. Peak temperatures in the Northeast should be surpassing 90 degrees later this week — probably by Thursday or maybe even as early as Wednesday — which should help keep cash prices on the rise, he added.

Gulf Coast-Northeast basis spreads were pretty wide around 80 cents in some cases Monday, “but we’ve seen even stronger [spreads] at times in the past, the producer continued. He noted that upstream IT constraints on Transco helped carry the Station 65 average above $9. That in turn added further impetus to Northeast increases because “as the commodity price gets higher, it raises your fuel costs to move the gas to the citygate,” he said.

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