Increases of more than a dime were the norm Monday as 80-90degree temperatures throughout the eastern half of the country andthe ensuing electric generation load caused gas prices at allpoints to rise substantially. New York Citygate led the way withprices increasing from the low $2.50s on Friday to the mid $2.70syesterday. The need for Northeast electric generation was socritical yesterday that the New England ISO issued a “powerwarning” and asked consumers to voluntarily curb power use.

“Utility generation load really picked up today in theNortheast,” one trader said. “People were burning whatever theyhad-coal, oil, natural gas. With power prices spiking to as much as$1,000/MWh (Nepool) it made sense to buy all the $2.70 gas youcould burn. Coal and oil are cheaper, but then you have to pay forthe sulfur credits.” He did New York Citygate deals in the low tomid $2.70s and Tetco M3 incremental trades in the high $2.60s.

One source said hot weather caused Chicago prices to open 17cents higher than Friday’s close. Power pricing in the Midwestsoared to $250-$300/MWh from $25-30/MWh late last week. “It’s allabout air conditioning,” he said. “In the upper Midwest andChicago, they’re getting both the heat and the humidity. Thisweather is supposed to hang around all week so I think prices willdo that too. The only thing that might change this strength is anoutrageous AGA [storage injection] report on Wednesday.” He quoteda Chicago Citygate high of $2.48 in early trading, but bymid-morning the point had ticked down to $2.43.

A Gulf Coast trader who did incremental deals at Transco Station45 and ANR Southeast Louisiana in the mid 2.30s, said gas futuresstrength was also a factor in Monday’s cash rise. “Although thefutures market was relatively flat Monday, it is overall in apretty strong position. After cash tumbled Friday, it had somecatching up to do.”

Even the West Coast, which often bucks the rest of the nation’strends, hopped into the rebound party. One trader who was active inthe western region Monday said the uptick was not surprising.”Between the screen being so high and the West taking such a hardhit at the end of last week, western markets had nowhere to go butup.” He quoted San Juan Basin trades in the high $2.00s, up fromthe mid $1.90s late last week.

Rebounding prices yesterday did not translate directly intosuccess for one Southeast gas trader. He did incremental deals onSonat in the high 2.30s and said activity in the area was minimal.”Nine out of 10 people I’ve talked to today have been sellers.Something is out of whack. Everybody with the ability to switch tooil in Florida is doing just that. Prices are up though, sotomorrow could be different.”

The Chicago trader isn’t the only one scratching his head aboutlast week’s storage report. One source expects a 85-95 Bcf storageinjection in part because of the holiday weekend. Another said itwas too early to guess what the AGA would say this Wednesday, butthe report is not as important as the market’s reaction to it. “Whoknows what is going to happen this week,” he said. “Last week’sresult of a 71 Bcf injection was on the low side for sure, butthere is still an enormous overhang. For the Nymex to climb intothe high 2.30s and low 2.40s and stay there is baffling.”

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