Expectations of growing power generation load spurred by hotter weather in much of the U.S. early this week extended a cash market rally Friday and got the August aftermarket off to a strong start. Gains for Sunday-Monday flows (prompted by the month-to-month transition occurring Sunday) mostly ranged from about a nickel to a little more than 20 cents, although a couple of flat points sneaked into the overall picture.

Although their potential for disrupting Gulf of Mexico production was not considered great, a couple of tropical disturbances in the Atlantic Basin likely provided a bit of psychological support for the late-week price firming. The Florida Keys were being drenched Friday morning by thunderstorms from a low-pressure area, and its west-northwest tracking toward the warm waters of the Gulf gave the area a chance of development. Another low-pressure system was also generating thunderstorms east of the Bahamas, but it was expected to move toward the Carolinas coastline. The Weather 2000 consulting firm believed it highly likely that the system at the southern end of Florida would be eligible for a tropical depression and/or storm classification before the weekend ended.

Although a fall of nearly seven cents by natural gas futures Friday was a bearish signal for cash gas, most attention at Nymex was directed at the skyrocketing crude oil contract. Only two days after its previous record, crude raised the bar even higher with a daily settlement at $43.80/bbl, as supply concerns over the still unsettled fate of Russian oil giant Yukos and potential terrorist attacks against Middle East infrastructure continued to roil oil markets.

Record crude prices couldn’t have had any effect on Friday’s gas market but likely will come into play this week unless oil comes back down very quickly, a marketer commented. Another source was thinking similarly, saying crude’s new heights will have to be sustained for a while before having any significant impact on gas numbers. After all, she noted, the gas screen continued to have a mind of its own in falling Friday despite the massive display of price muscle-flexing in the nearby crude trading pit.

As of Friday up to 250 MMcf/d of mostly offshore production upstream of the Toca processing plant on Sonat’s system in southeast Louisiana was in limbo after Pogo Producing made a last-minute request that FERC immediately order allocations at the upstream receipt points (see related story). Capacity of the Toca I unit was scheduled to be reduced Sunday by as much as 750 MMcf/d for two to three weeks to allow plant upgrades. Some diversion options were available, such as one offered by Tennessee (see Daily GPI, July 30), but Pogo told FERC it had 52 MMcf/d behind Toca that had no transportation alternatives to Sonat.

Temperatures are staying pretty high in California, so neither of the state’s huge LDCs issued a weekend OFO, a western marketer said. Despite the OFO lack, California prices tended to see Friday’s smallest upticks. Transport spreads were not working very well on western pipes, the marketer added.

In contrast to California’s relative price weakness, Rockies/Pacific Northwest points recorded many of the day’s largest advances based on forecasts that heat levels will be rising again this week in the Rockies and desert Southwest.

A Midwest trader said highs in her area would be getting close to 90 degrees Sunday and even hotter as this week proceeds. next week

The Northeast was already approaching 90 Friday, so there was some weather demand, a marketer said. “Price action was quiet at first, because people took a while to figure out what they needed” since they were trading for Sunday-Monday only instead of a normal three-day weekend flow period, he continued. Traders would be watching the tropical system off southern Florida for possible development over the weekend, he said.

Citigroup analyst Kyle Cooper said Friday his “very early estimation” for the next storage report looks for a build in the 80s Bcf.

Bidweek trading seemed “a little thinner” than usual, an East Coast trader said, adding that he definitely saw more sellers than buyers.

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