Despite predictions of moderate declines of cooling loads in parts of the South, Midwest and Midcontinent, the previous day’s rally of 16.6 cents by August futures combined with remaining heat-related gas demand to lift cash prices at all points Wednesday.

Gains ranged from 2-3 cents to a little more than 35 cents and tended to be strongest in the Rockies, where transportation constraints and moderate temperature increases were bullish factors.

Prior-day screen support for cash quotes proved to be a one-day affair as rising concerns about burgeoning storage inventories turned a positive beginning at Nymex into an eventual loss of 14.6 cents for the prompt-month gas contract Wednesday (see related story). That put into doubt further cash increases Thursday.

Could it be that one of the mildest Northeast summers in years (at least so far), a bearish influence on the gas market in recent weeks, might turn into a bullish condition later this year? Joe Bastardi, chief meteorologist for AccuWeather.com, suggested such a scenario Wednesday in saying “cooler-than-normal weather this summer in the Northeast could point to a cold, snowy winter for the Northeast and Mid-Atlantic states.” The heart of the 2009-2010 winter will be centered over the area from Boston to Washington, DC, Bastardi said. “In years past, cooler summers have been followed by harsh winters,” he added (see related story).

Florida Gas Transmission extended an Overage Alert Day into its third straight day Wednesday and related production-area prices responded with increases on either side of a dime. The Florida citygate recorded Wednesday’s biggest uptick.

Some sections of the South that had reached the upper 90s through Tuesday will be retreating into the low 90s Thursday, according to Weather Central, while highs in the eastern South remain mostly subpar for this time of year. The Northeast will be warming slightly, but with highs still failing to surpass the mid 80s, no significant jump in cooling load is expected.

Meanwhile, the Midwest’s rise of peak temperatures into the 80s Wednesday was a short-lived warm-up, with highs subsiding into the mid 70s to 80 area Thursday, Weather Central said. The Pacific Northwest and interior California will remain quite a bit warmer than normal, while such Southwest locations as Phoenix and Las Vegas continue to top out around 110. Otherwise the West is still relatively mild for now, although it is predicted to be above normal next week (see forecast below).

Excess supply issues are easing to some extent in the West. Westcoast, which has been reporting high linepack throughout its system for most of the time in recent months, said it was actually a little below its target level Wednesday.

A western trader noted that it was “very hot” in California’s Central Valley right now, although coastal areas were still temperate. Overall the West has been fairly mild this summer, but “it’s getting hotter,” he said.

The trader noted that there was essentially zero margin Wednesday on variable transport costs between San Juan Basin and the PG&E citygate, meaning there was no profit to be made by those with established pipeline capacity. That was largely because of the great heat in the desert Southwest, where a lot of traders were “dropping off” their gas instead of sending it on to California, he said.

The National Weather Service’s (NWS) six- to 10-day forecast for the July 20-24 workweek calls for above-normal temperatures throughout the Pacific Northwest, Southwest and most of the Rockies, extending into the western end of Texas in the south. Above-normal temperatures are also expected in northern Maine. The agency predicted below-normal readings for most of the eastern half of the U.S. to as far west as a line running southward from eastern South Dakota through North and East Texas. However, normal conditions are due in the southern Florida peninsula and most of the Northeast except for its southwestern corner, NWS said.

SunTrust Robinson Humphrey analyst Cameron Horwitz projects a 96 Bcf addition to storage for the week ending July 10. “The larger sequential injection is largely attributable to lower gas-fired power generation amid a 15% w/w [week-on-week] decrease in cooling degree days and low industrial demand stemming from the July 4th holiday,” Horwitz said.

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