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Reaction to Northeast Heat Muted; West Soars Back

Reaction to Northeast Heat Muted; West Soars Back

Despite the return of hot weather alerts and temporary voltage reductions among Northeast electric utilities Monday, spot gas prices found it tough going to build much further on Friday's moderate gains. Gas demand was fairly strong, sources said, but not big enough to boost prices any more than 1-2 cents at citygates and in the Gulf Coast production area. In fact, several Gulf points turned in flat performances.

Meanwhile, the West again followed the script that had been written for it early in the July aftermarket. With weekend OFOs by the big California LDCs ended, western markets saw big turnarounds from Friday's price dives.

Electricity generators in the Northeast were being pressed by high air conditioning loads Monday, but there was nothing like the urgency emerging from the Independence Day holiday weekend when a number of utilities reported record power sendouts July 6 and a number of blackouts occurred. Philadelphia-based PECO Energy said it set peak demand records both Saturday and Sunday this past weekend, and was among utilities affected by a PJM Interconnection order for a 5% voltage reduction. However, PJM was able to cancel the voltage order barely two hours after issuing it, and no significant power outages were reported. Deliveries in Transco's Zone 6 and Texas Eastern's M-3 pool were flat to only a couple of pennies higher, and they're unlikely to achieve any new gains today because the weather is supposed to turn cooler Wednesday, a gas buyer in the Northeast said. However, temperatures will heat up again toward the weekend, he added. Another trader felt Monday's prices were "sustained" by the heat but not raised much by it.

Midcontinent prices tended to rise a bit higher than in the Gulf Coast despite flat Midwest citygates, a marketer said, and the regional warming process will only intensify later this week. Temperatures put Midcontinent numbers back near the lower end of bidweek ranges (lower to mid $2.10s, that is) Monday, he said. Loads are overwhelmingly electric-based, the marketer continued. "Look at ONG. It has no electric load on it at all and ONG volumes are very light, whereas the Transok/Enogex systems are pretty busy."

One source had a "gut feeling" that this week's AGA storage injection report will be in the 80-100 Bcf range.

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