With spreading above-normal temperatures starting to push daily highs into the 80s across much of the East and in some inland parts of the West and past 100 in the desert Southwest, the resultant increase in power generation load had prices rallying at most points Tuesday. The return of industrial demand from a holiday weekend and a reduction of excess supply issues in the West also contributed to the overall bullishness.
Though it remains to be seen how long the trend will continue, the cash market saw mixed price movement prevailing much as it had in the past two weeks. Quite a few points, primarily in the Midwest, Gulf Coast and Western Canada, ranged from flat to about 20 cents lower. Otherwise the West, which had seen the lion's share of softness since the middle of last week, recorded most of the largest of gains that ranged from a couple of pennies to about 95 cents.
Western prices, which had been struggling late last week with a supply glut, were able to recover after California's two biggest LDCs, SoCalGas and PG&E, allowed high-linepack OFOs to lapse during the Memorial Day weekend. In addition, Kern River, which had been reporting high linepack in most or all of its system, said linepack was normal in all segments Tuesday.
Despite their tending to see nearly all of the biggest rebounds, Rockies numbers were still hard-pressed to average much more than $3 in most cases, more than $4 less than the majority of the Gulf Coast. And Questar, although it had some quotes topping $3, still sported a sub-$3 average. The Rockies also remained at triple-digit deficits to first-of-month indexes; the next biggest deficit was a little more than C50 cents for NOVA Inventory Transfer.
High temperatures "will be well above average" Wednesday in the Northeast, in the Midwest east of the Mississippi River and in the Pacific Northwest, according to The Weather Channel (TWC). Although the South is expected to see conditions closer to normal, that means highs in the 80s for much of the region, TWC said.
"It's slowly starting to warm up" after being eight to 10 degrees below normal recently, said a Florida buyer. He said he found plenty of supply readily available during the June bidweek, but it was almost a moot point. Quite a few of the company's customers held long gas positions for most of May, "and I think they got a little gun-shy about staying long that much." The result was they were asking for less baseload this time than for May, he said.
The buyer said he saw Florida Gas Zone 3 basis getting bid up to nearly plus 40 cents, but he didn't think many people were going for that. He estimated that such basis yielded prices about 15 cents stronger than May's.
The National Weather Service's (NWS) forecast for the June 4-8 workweek calls for below-normal temperatures throughout the Northeast and Midwest, the eastern Midcontinent and in the Upper South to the southern edges of North Carolina and Tennessee, including northern Louisiana and Mississippi, northeast Texas and all of Arkansas. The agency predicts above-normal readings everywhere west of a line running southward through the western Dakotas into the Nebraska Panhandle and along the eastern border of Colorado before curving southwestward to include all of New Mexico except the southeast corner.
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