Rising temperatures throughout most of the U.S. and Eastern Canada combined with the residual support of natural gas futures that extended gains into a fifth straight day to produce large cash upticks across the board Monday. The continuing erosion of this year’s storage surplus, as evidenced in a below-expectations injection report last Thursday that is quite likely to be repeated this week, may also have contributed to the overall bullish mood.

Monday’s gains ranged from just under 20 cents in the Rockies to nearly 70 cents in the Gulf Coast. Most Louisiana points averaged above $8. And there were signs that cash market gains might continue on Tuesday. Not only will temperatures be going even higher in the Northeast, but September natural gas futures tacked on an additional 26.9 cents Monday. And Nymex’s crude oil contract soared an even dollar to $61.57/bbl, setting another intraday peak record of $62.30 in the process as the death of Saudi Arabia’s King Fahd kept global supply concerns simmering.

It’s getting “hot, hot, hot again” almost everywhere, said a Houston-based marketer, and that was the primary basis for cash strength. He noted that the Midwest was already registering highs in the 90s, but the Northeast wasn’t due to start seeing those kind of mercury levels until Tuesday. The marketer also commented that he had expected to see a higher Chicago citygate index for August than NGI‘s $7.21, but he realized that Chicago tends to get traded earlier in bidweek than many other points, and prices were lower then.

Evidence of how quickly hot weather is pushing prices higher came from a Midcontinent trader who reported getting lot of intraday orders Monday, especially from power generators. His company welcomed the intraday business, he said, because it got to charge a little premium for that gas. After all, “not everyone is able to provide those supplies” on short notice. Chicago is already looking “really strong for Tuesday,” when a high in the low 90s is expected.

The trader said he didn’t know how long prices could keep rising in the short term, “but I don’t think we’ll see any big drops.” The forecast for his local area calls for very hot conditions all this week, he said. He said that on Friday he was trading Chicago for Aug. 1 flow about 30 cents back of the screen, but for a while early Monday the citygate was 6 cents over the screen. He reported seeing an even bigger basis swing at Northern Natural-Ventura.

Power generation load did not seem to be quite as strong as it was last week at this time to a Gulf Coast marketer, “but it’s rising,” he said. Temperatures in the Northeast market area should be getting hotter through at least midweek, he said. The marketer was unaware of any significant pipeline constraints. Some Gulf Coast pipes are having concerns about processing economics this month, but it’s nothing major, he said.

A Southern utility buyer noted that his company was a little behind schedule on filling its storage accounts, “but I think we laid in enough August baseload and will be buying enough in the daily market to catch up.”

The Weather 2000 consulting firm proclaimed this the “hottest national summer in over 10 years,” with the West, Central U.S. and East all yielding some all-time heat records. “June-July 2005 yielded hot and dry weather or warm and muggy weather for most of the Central and Eastern U.S.,” it continued. “Many Southern locations had persistent unrelenting warmth (the only below normal day for Houston all June was just -1 on June 1st), while many Northern locations tallied double (if not almost triple!) the CDDs [cooling degree days] posted in June 2004. This is the type of widespread summer heat not witnessed across the nation since 1995 (or in some cases 1988), with extreme surface conditions causing computer models and short-term forecasters to continually underestimate daily, weekly and monthly results.”

Among the heat statistics for the last two months that Weather 2000 found to be of particular interest: Detroit had its hottest June-July in recorded history, and Chicago had its second hottest June-July ever. Cincinnati had its second hottest June-July in 39 years, while New York had its second hottest June-July in 11 years with 82% more days than normal breaking 90 degrees. Houston had its hottest summer since 1998, with 20% more days than normal breaking 90 degrees. Sacramento had its hottest July ever, while Denver set its all-time hottest daily temperature ever, and did it twice, in July.

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