The cash market recorded solid rebounds at all points Thursday in what one source said was more a response to the previous day’s strength throughout Nymex’s energy futures complex than to any underlying fundamental support. A majority of gains were in the teens, with an overall range from about a nickel to a quarter.

Because of the weekend transition from July to August, Thursday’s trading covered flows through Saturday. Friday deals will be done for the Sunday-Monday period.

It was the energy futures advances on Wednesday, especially the spike by September crude oil to a new record daily settlement of $42.90/bbl, that lifted cash prices Thursday, said a Gulf Coast producer who also trades Northeast points. There certainly wasn’t any great increase in air conditioning load that fueled the bullishness; after all, he noted, the Northeast is still fairly mild with daily highs failing to exceed the 80s. Henry Hub had traded about a dime back of the screen throughout July so far, but the spread opened to more than 20 cents with the September contract’s debut as prompt month Thursday, the producer added.

The Energy Information Administration’s report of a 70 Bcf addition to storage inventories last week was towards the low end of prior estimations. Futures traders greeted it with muted bullishness, sending a screen that had been slightly in the red early Thursday to a gain of only 3.8 cents on the day.

It’s a pretty good bet that prices will continue to rise in Friday’s launch of the August aftermarket, said one trader. He had already done a couple of early Henry Hub sales for Sunday-Monday in the mid $6.00s, up a little more than a dime from Thursday’s average. “That seemed about right considering where the August screen went off the board,” he commented. Also, it may reflect expectations of hotter weather in several areas by the begging of next week, he said.

In its six- to 10-day outlook for the Aug. 3-7 period, the National Weather Service predicts above normal temperatures in a wide swath from the southeastern corner of California to West Texas at the southern end and ranging through much of the Rockies and Midcontinent to the Canadian border from the western edge of North Dakota to the Buffalo, NY area. NWS expects below normal readings in two areas: Northern California along with Oregon and Washington, and in a strip along the Gulf Coast from southern Alabama to South Texas.

Several pipelines will begin phasing out the old Gas Research Institute (GRI) surcharge as early as Aug. 1, and it will have ended on all pipes by the end of the year. A producer who estimated the surcharge as averaging about 0.4 cent per dekatherm transported said it’s too small to have any real impact on the market with its disappearance. The phaseout “might make a little difference” in the production areas but not in market areas, he judged.

But to an industrial end-user, every little bit helps with the GRI surcharge going away. Expressing the cost as less than half a cent per MMBtu may not sound like much, he said, but his company estimates that it will be worth about $300,000 a year in feedstock and fuel savings. He noted that his company belongs to the Process Gas Consumers Group, which is among opponents of a proposal by GRI successor Gas Technology Institute to implement a new 0.56-cent/Dth surcharge to fund industry research and development starting next January (see Daily GPI, July 29).

The end-user went on to say he saw August prices coming down a little each day until the expiration-day futures uptick. ANR and Sonat have some processing issues that complicated planning for August gas flows, he said.

The Gulf Coast was getting crushed Wednesday in indexed deals for the August bidweek, a marketer said. Trading at index minus 3-4 cents was common on several pipes, he said. He sees a pretty good chance of people who refused to baseload August gas in favor of testing the daily market getting burned. June and July have been unusually mild, he said, “but I would expect August to have much higher heat levels.” Also, the Atlantic hurricane season has been uneventful so far, but that can’t last much longer, he added. Both situations favor incremental prices above first-of-month levels, he said.

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