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Holiday Market Looks Stronger than Usual

Holiday Market Looks Stronger than Usual

Swing gas for today-only flow generally was down a little from late-bidweek levels, but not in all cases. In fact, a Sumas trader found his swing quotes running up to a nickel more than his July baseload deals. And even at the points where there were slight retreats, sources still viewed the aftermarket as starting off fairly strong. Despite a stagnant August screen Wednesday, the same thing that caused end-of-June and late-bidweek run-ups was credited for the swing strength: oppressive heat almost everywhere that had power plants straining to handle the air conditioning load.

It doesn't seem like this Fourth of July market will be nearly as soft as usual, said a Houston-based producer. In previous years, he recalled, holiday-period price drops could range up to 15 cents or so, "but it looks much stronger this time."

Having a Canadian holiday today and a U.S. one Monday made for a confusing array of trading patterns. Some quoted July 1st-only deals, others 1st-2nd, and still others 1st-6th. And then there was the Calgary marketer who said some trading partners insisted on doing deals through July 5 only, "so it looks like I'll be back in on Monday to re-trade this stuff."

A Texas source said he made sales to utilities for today only but made his purchases through July 6 "because that's what producers wanted." That gave him incentive to hope that prices remain high through the weekend, "but even if they don't, I'll just take the gas to storage."

It surprised a lot of people to see how strongly weekend pricing is shaping up, according to a Gulf Coast marketer. "They thought the price depressant of industrial shutdowns for the holiday couldn't be overcome by weather, but for now it sure looks like that's how it is," he said.

Western prices look to be a bit softer for early July than in other areas. Cal-ISO, the California Independent System Operator, said a Stage One Electrical Emergency was declared for Tuesday afternoon only as a few cogeneration and other non-nuclear power plants went down and decreased the state's electric operating reserves below the 7% level. Reserves were sufficient again Wednesday, a Cal-ISO spokesman said, and a cooling trend due to start today should prevent any return of Tuesday's emergency. Another indicator of western softness was that Pacific Gas & Electric, while not declaring an OFO, projected a higher linepack than its target through Saturday.

What about the rest of July, after the holiday is past? Besides the forecasts of widespread heat, a marketer was bullish about recent high electric prices and crude oil futures that went above $19/bbl Wednesday. In fact, "it looks like the entire energy complex is making gains," she said. But while acknowledging soaring costs for electricity, a gas buyer offered this little shower of ice water: "People do stupid things during bidweek; they assume that these temperatures and power prices will persist through the month." She was not among those people.

Bidweek wrapped up mostly on the high notes sounded Tuesday, although a Gulf Coast marketer detected a bit of fallback as Wednesday's final deadline approached.

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