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Heat and Screen Light Fire Under Cash Prices

Heat and Screen Light Fire Under Cash Prices

Much of the U.S. bore some resemblance to a lit oven Thursday, and the Nymex screen was soaring like a space shuttle takeoff from Cape Canaveral. The two events combined to give strong support to eastern cash prices, which rose between a nickel and a dime at almost every point. Gas demand was especially intense at the Northeast and Chicago citygates; both were up about a dime. Transco Zone 6-NYC deliveries topped all points with a high of $2.70.

Only parts of the West, however, managed to share in the general bull market. In fact, quotes fell by either side of a nickel at Malin and the PG&E citygate due to a high-linepack OFO issued for today by PG&E (see Transportation Notes). The Southern California border was basically flat as SoCal Gas did not emulate its Northern California neighbor. But a marketer looks for falling border numbers today, saying he would be extremely surprised if SoCal doesn't add its own OFO to PG&E's.

Outside of some Rockies/San Juan/Pacific Northwest flatness, other western points failed to be depressed by the weakness of the Northern California market. Waha and Permian Basin quotes for both El Paso and Transwestern rose more than a nickel, undoubtedly feeding off the strength in the Midcontinent/Midwest market, a marketer said. A Calgary source reported intra-Alberta prices rising into the low C$2.80s and Westcoast Station 2 up to the mid C$2.70s.

Indicative of the rapidly rising air conditioning load for gas, Duke Power in the Carolinas and Commonwealth Edison in the Chicago area reported experiencing record electric demand Wednesday and Dayton Power and Light in Ohio posted its own record Thursday. Power generation load was very heavy in the Cinergy pool, which helped push Appalachian gas prices more than a nickel higher, a marketer said. And Florida Gas Transmission extended an OFO at least through Thursday due at least in part to power needs in the Florida peninsula, another trader said.

One source professed not to know what was going on in the Nymex trading pit, but said it was obvious that identical 14.2-cent runups in the Henry Hub futures contracts for both August and September was partially behind the cash strength. "I guess either the funds or locals finally forced all those shorts to get out of their positions," he surmised.

August business remained a non-starter for most sources. One reported doing Transco Zone 6-NYC deals at a paper basis of plus 25 and was hearing TCO at plus 15. A Gulf Coast marketer quoted basis trading of minus 5.5 for Tennessee's 500 Leg, minus 1.5 for TGT Zone SL and minus 2 for Columbia Gulf-onshore. A western trader was hearing fixed-price talk of $2.10-11 for San Juan-Blanco and $2.26 for El Paso-Permian.

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