Prices continued to increase in most of the cash market Tuesday as forecasts of a hot summer were showing early signs of coming true, even with the official start of the season still three weeks away. A pre-holiday advance of 4.7 cents by July futures on Friday also helped strengthen physical numbers.

The few instances of flat quotes that defied the overall increases occurred in the West, where SoCalGas had just ended a three-day high-linepack OFO and PG&E had its own OFO extending into at least a third day Wednesday. Also, except for the desert Southwest most of the mildest temperatures were being forecast for western locations.

Otherwise gains ranged from 2-3 cents to nearly 20 cents; the Northeast led the way with a solid run of double-digit upticks.

For a while Tuesday morning it appeared that the screen would continue to provide prior-trading-day support for cash prices. But after being as much as about a dime higher for a while the July futures contract finally retreated into negative territory, winding up with a drop of 9.3 cents on the day (see related story).

While highs of 80 and up will continue to dominate most of the weather outlook east of the Rockies Wednesday, it was uncertain how much of a damper a series of cold fronts predicted by The Weather Channel will put on spot market prices. Thunderstorms also are due to have some cooling effect in several areas.

Tuesday’s official start of the 2010 Atlantic hurricane season was quiet. Tropical Storm Agatha had formed earlier in the Pacific and its remnants were causing intermittent showers and thunderstorms Tuesday in the northwestern Caribbean Sea east of Mexico’s Yucatan Peninsula after having made the trek across Central America, the National Hurricane Center (NHC) said. The agency did not expect any significant development or movement of the remnants.

There was no Atlantic tropical activity to report, NHC said. The first storm to merit naming in the Atlantic Basin will be called Alex.

Despite an increase of nearly a dime at Henry Hub, IntercontinentalExchange reported a large drop of Hub volumes traded on its online platform — from 917,700 MMBtu Friday to 787,600 MMBtu Tuesday.

A Northeast marketer said he was surprised “to some degree” by the market staying as strong as it has in recent days. But although his region is not super hot, he added, the Northeast has had “a pretty decent amount” of power generation demand.

The marketer said mid-range forecasts indicated that conditions will stay at least seasonally warm to hot in the Northeast and Midwest through at least the middle of June, so no one should expect major softness anytime soon. Bullish traders may have been justified in being cautious about the potential for a very hot summer, he said.

“The heat’s finally here,” proclaimed a utility buyer in the South, but he said his area might get a small break from high temperatures in the low 90s toward Friday. Meanwhile, though, the utility has been seeing noticeable growth in electric generation load recently, he said. As a result his staff has been buying swing gas regularly, and that is unlikely to stop since the company also will try to put a lot of gas into storage this month, he added.

But a Midwest utility buyer had a different perception from that of his Southern counterpart; the Midwesterner said his company has not detected any significant increases in generation load yet. Of course, one reason was that the local area was only reaching the mid 80s Tuesday, he said, and there were scattered thunderstorms popping up. Saying the market in his area was very quiet, he added, “You’d think it was still May.”

Working gas storage injections for the week ending May 28 are projected to be 88 Bcf, according to Ron Denhardt of Strategic Energy & Economic Research.

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