The cash market emerged from the July 4 holiday weekend with astrong performance in which prices ranged from flat at some pointsin the Gulf Coast and Midcontinent to nearly 20 cents higher inCalifornia. The West made a remarkable recovery from last Friday’ssteep dives, reclaiming nearly all of the ground it had lost. Aheat wave over the eastern third of the U.S.-especially acute inthe Northeast-kept prices firm in the producing and market areas.

The market strength wasn’t expected to last, however. The HenryHub futures contract for August waited until after the bulk of cashtrading was finished before making most of its near-dime plungeTuesday, but it was carrying late cash quotes down with it inalmost every market, sources said. In addition to the negativescreen influence, a cooling trend due Tuesday night in theNortheast will erase a significant amount of power peaking loadtoday, they said. A fall in high temperatures from 100 degrees to90 degrees may not seem like all that much, said an official of aNortheast power grid operator, but it likely will eliminate most ofthe strain that many area power utilities labored under Tuesday.

The PJM [Pennsylvania-New Jersey-Maryland] Interconnectionimplemented a 5% voltage reduction across its system that was stillin effect as of late Tuesday afternoon. PJM earlier had warned ofthe possibility of rolling blackouts, but none were necessary,according to a spokeswoman. Tuesday’s unofficial PJM peak load wasaround 52,000 megawatts, she said, breaking the previous record of49,406 megawatts set July 15, 1997.

As it did last week, ISO (Independent System Operator) NewEngland had a Power Warning in effect Tuesday in an effort toreduce consumer electrical demand. In addition, numerous electricutilities throughout the Northeast issued customer appeals forpower conservation measures. Electric prices spiked in response tothe situation. PJM numbers for today’s transmission were in the$115-150/MWh range, a marketer said, compared to $30-35 averages inrecent weeks. He and another source confirmed that $850/MWh was thegoing price for intraday PJM juice Tuesday. Northeast citygateprices for gas were up about a nickel into the low $2.60s, whichseemed puny in comparison to the power market.There was also apremium for intraday gas, but it was small. One trader reported anintraday Transco Zone 6-NYC deal at $2.68, only 3 cents over hisaverage for next-day flow.

A marketer who was able to sell Northern Natural field gas atWaha for $2.26 early, said the later drop into the $2.10s was soprecipitous “that we ‘hid’ 3.5 MMcf/d rather than sell it.”

Double-digit increases were the order of the day at many Westernpoints. The Southern California border and PG&E citygaterebounded from Friday’s debacle into the low to mid $2.40s and high$2.50s respectively. SoCal Gas no longer had an Overnominations Dayin effect, one trader said, and although PG&E had ahigh-inventory OFO in effect Tuesday (see Transportation Notes), itwas not extended into today. Quotes for San Juan Basin and Rockiespipes, spurred by the renewed power generation demand in Californiaand east-of-California markets, climbed back into the neighborhoodof July index levels.

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