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General Market Gains About a Nickel; West Weakest

General Market Gains About a Nickel; West Weakest

Despite flatness at a few mostly western points, the overall market pushed higher by around a nickel or so Tuesday. Electric generation stresses had faded in the Northeast, but early screen support and rising air conditioning load in the South-and to a milder extent in the Midwest-combined for the cash gains.

Though August futures eventually settled at a small loss for the day (and continued lower in Access activity), their higher position while cash was still trading was enough to give some boost to physical gas, several sources said.

The screen's late retreat was prompted by a drastic plunge of more than a dollar in crude oil futures, which could signal that fuel oil prices may become competitive at the burnertip with gas again in the near future. The crude nosedive was caused by the head of Petroleos de Venezuela SA suggesting that if oil rose to $22/bbl, OPEC nations might abandon its production limits, a source told Daily GPI.

A marketer said he thought physical traders felt good enough about their storage positions to shrug off the moderating Northeast weather. They were ready to interrupt injections to satisfy Monday's heat-driven demand, the marketer continued. When there were no significant turnbacks of gas at Louisiana points Tuesday, he said, "that tells me the slacked-off air conditioning load from the Northeast was being replaced by renewed injections."

One trader expressed surprise at tight Gulf Coast and Appalachian ranges in the midst of substantial price increases.

Because of its relationship to higher Gulf Coast pricing, Waha put a little distance between itself and mostly stagnant Southern California numbers, a marketer said.

A couple of Calgary traders reported intra-Alberta deals for August being done at C$2.74-75, approximately the same level as Tuesday's day trading. However, both July swing and August baseload were softening by about a penny later on, they said.

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