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August Prices Up on Storage, Heat, Screen Data

August Prices Up on Storage, Heat, Screen Data

The recent running of the bulls in Pamplona, Spain, seems pretty tame compared to the stampede developing in the gas market. It was a more hectic Nymex closing day than usual Wednesday as a mild increase in the last day of trading August futures was accompanied by what one source called a "pitiful" little AGA storage injection report, Michigan electric utilities appealing a day in advance for energy conservation, a skyrocketing Access session and higher July swing numbers. All in all, it added up to an extremely strong market that "there doesn't seem to be any way of stopping," a Texas marketer said.

Things are headed up like a rocket and got extra propulsion from the AGA figure, which was the lowest comparable injection level in five years, according to one trader. Chicago citygates for August began the day trading around $2.64 but were hitting $2.73 after the AGA release, he said. Henry Hub cash likewise jumped up several cents to $2.67 on the news. This is about the fifth month in a row where cash has soared following the settle, he added.

A Northeast-oriented marketer agreed that basis got firmer Wednesday. He pegged Transco Zone 6-NYC at plus 32, Zone 6 (non-NYC) at plus 25, Texas Eastern M-3 at plus 25, CNG at plus 19.5 and TCO at plus 17-17.5, all higher than reports from earlier in bidweek. The marketer conceded that AGA's figure of 41 Bcf was pretty small, but said there's no reason not to expect an even smaller volume next week "because of the way people are pulling from storage to sell at the high prices during this heat wave."

Another trader said Southern California border basis was running at plus 3 for August, plus 4 for September and plus 1 for the winter season. PG&E citygates are running at plus 14 for August, he said.

A Calgary source's bidweek quotes included Malin in the mid $2.20s, Stanfield and Kingsgate in the mid $2.10s and intra-Alberta in the high C$2.90s. However, those included a few deals done before Wednesday and undoubtedly will reflect the lower ends of ranges at those points, he said. In fact, an electronic trading service showed intra-Alberta climbing to C$3.06 late in the afternoon, he said.

Index-plus deals continue to rule the Midcontinent for August, a marketer said. "Index trading at plus 1-1.5 right now is evidence of the strength of this market. Buyers just want to minimize their losses." He quoted a wide range of $2.46-55 for ANR-Southwest, Panhandle Eastern and NGPL-Midcontinent packages done so far this week. But as of Wednesday, "the entire world is a seller at $2.55, and bids are not far off at $2.535-54." The marketer reported getting NorAm offers at $2.60 for the east pool and $2.55 for the west pool.

The July swing market resumed its march upward following Tuesday's pause. Incremental numbers ranged from flat (mostly at a few western points) to almost a dime higher. The Midcontinent/Midwest region, where cooling load seemed to be most intense, stood out with the highest overall increases. Michigan citygates surpassed $2.70 in some cases as both Consumers Energy and Detroit Edison issued advance appeals for voluntary customer reductions of electricity use today.

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