As expected, a strong rebound by July futures a day earlier and still-robust cooling load — despite some moderating weather trends from earlier in the week — pushed cash prices higher across the board Thursday.

Although it was released too late to influence most cash trading Wednesday, an updated forecast by the Colorado State University team indicating even stronger hurricane activity than it had previously anticipated (see Daily GPI, June 3) also had a role in Thursday’s price strength.

A large majority of the gains, ranging from just under a nickel to about a quarter, were in double digits. The advance was spread fairly evenly across geographic market areas.

A report of an 88 Bcf storage build during the week ending May 28 by the Energy Information Administration fell a bit short of consensus expectations in the low to mid 90s Bcf. The response by Nymex traders was highly bullish, however, as they caused the July gas futures contract to soar by 26.6 cents (see related story), signaling a likely continuation of cash strength Friday.

Cold fronts and thunderstorms were depressing cooling load a bit Thursday in most sections of the U.S., but although The Weather Channel expected rainy conditions to persist along the Eastern Seaboard for a while longer, much of the nation will begin to warm up again going into the weekend. Houston can expect highs of 96-97 from Saturday through Monday, according to the Houston Chronicle.

Unlike some others, a Midcontinent/Midwest marketer said he was “not terribly surprised” at the recent strength of cash and futures prices. Many people have been bearish for a while, he said, but he still considers gas to be undervalued in relation to other fuels, although he acknowledged that most of the potential coal-to-gas switching in power generation has already occurred and will be relatively meek for the foreseeable future.

Midwest weather has gotten relatively mild in the last couple of days, the marketer said, but should start seeing hotter conditions again during the weekend. He perceived most combined-cycle gas generation units as running most of the time in the Midwest, but the peakers are generally idle for now, he said. But although the region has cooled off a bit, his company has not seen any significant dip in power generation load, he added.

A Lower Midwest utility buyer said “very nice weather” currently meant lower gas sales for his company, but that was fairly normal for this time of year. Unlike the marketer, he found spot price strength in the last few days a little difficult to rationalize. But because one of the utility’s primary pipeline suppliers, Northern Natural Gas, does not allow storage injections into its facilities to begin until June 1 (unlike the practice on most of the pipeline grid), the late start will cause him to make fairly hefty storage purchases to make up for lost time.

Although Frontier Weather is predicting a hot spell returning to much of the Midwest by next week, the buyer said mid-80s highs Friday and Saturday will be about the hottest days for the next week in his area.

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