Coasting a bit on the residual effects of the previous day’s futures run-up and continuing to experience heating load from the Northeast through the Midwest and Upper Plains, cash prices saw gains at most points in Tuesday’s strong launch of the October aftermarket.

But the upticks were smaller than on Monday, and a few points in the Gulf Coast and Northeast flattened out. Western markets again led the overall advance with increases of up to about a quarter, while points in the East ranged from flat to about 15 cents higher. Some traders were reporting incremental prices at 20-40 cents or so above their bidweek numbers.

What the market was gaining in northern heating demand was being offset at least partially by declining air conditioning load in the South. From Texas through the Carolinas, daily high temperatures were being capped in the low 70s and low 80s Tuesday, and the unusually cool conditions for early autumn were expected to continue.

But residents of the desert Southwest are still baking under triple-digit highs, and it was reflected in most of Tuesday’s biggest gains of more than 20 cents being recorded at Waha and in the Permian and San Juan Basins. Low linepack and draining storage prompted El Paso to issue an OFO (see Transportation Notes),

A marketer noted that most Permian/Waha gas must be going westward Wednesday, because unseasonably moderate temperatures in Texas were putting a serious dent in intrastate power generation buying by the utilities.

One cash source said it was hard to get any cues Tuesday from Nymex because the natural gas screen kept ranging a few cents to either side of flat before finally closing out the day down 6.5 cents. But some ancillary strength from the petroleum side may be forthcoming if strength continues there, he added. Crude oil and heating oil futures racked up major increases as traders reportedly were still in bullish moods from OPEC’s announcement last week of a 900,000 bbl/d cut in member production quotas. Crude vaulted the psychologically important barrier of $29/bbl to wind up at $29.20.

“I scraped sleet off my car this afternoon, and there’s a decidedly wintry look in the sky,” commented a trader in the Upper Midwest. He said he was trying to get further ahead on preparing for the winter market than usual “because we’re expecting a cold one.” Michigan’s in-state supplies are being kept tight because a Consumers Energy-operated processing facility on the MichCon system is having problems and causing some shut-ins, he said. That helped give MichCon citygates a nickel-plus premium Tuesday over Consumers deliveries, he said.

Things are “looking a little bullish” for the first few days of October, a Northeast marketer said. “We’ve got some utilities already calling for heating load, but the test will come when it gets really cold.” He observed that spreads between the production and market areas are getting tighter, citing Dracut as 40-45 cents above Henry Hub Monday but only 32-35 cents higher Tuesday.

However, another source commented, “The forecasters say we should have some cold weather in the Northeast, but I don’t really see it. I step outside and I feel perfectly comfortable. Maybe it’s just me, but I could deal with a less technically driven market.”

Tropical Storm Kate is of no interest to the market, since its advance got slowed and was becoming more northerly Tuesday while still on the eastern side of the Atlantic. But a Hurricane Hunter plane was being sent to check out “at least three big clusters of thunderstorms and squalls blossoming near and south of a stalled front” in the southern Gulf of Mexico, where tropical development is still possible, The Weather Channel said.

A Midcontinent trader was disappointed in his last-day October bargain hunt. “There wasn’t a lot of volatility in prices Tuesday,” he said. “I had hoped for some end-of-month clearances where ‘absolutely everything must go!’ We could have bought some more monthly gas, but we would have paid a lot more for it than I was willing to.”

A producer said there were some Chicago deals done on Monday at around $4.80 while the November screen was soaring in its prompt-month debut, “and that was pretty much the high. Most other business was done from the mid to high 4.50s to about 4.70.”

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