Sources cited increasing heat levels, particularly in the Midwest and Northeast, as the primary reason for fairly sizeable price rallies Tuesday at a majority of points. Only California, which was under a double-OFO whammy, saw moderate softening, although its depressant effect on western markets in general resulted in flat quotes for San Juan Basin and a few Rockies points.

Although some of Tuesday’s gains were as little as less than a nickel, most were in double digits and ranged as high as around 35 cents in the Northeast.

Both of California’s big distributors issued high-linepack OFOs (see Transportation Notes), and state market quotes fell by as much as nearly a dime. However, the negative impact was limited to only a few other western points. Temperature-sensitive CIG and Cheyenne Hub, along with Questar, joined the overall market with dime-plus upticks in response to forecasts of Wednesday highs in the mid 80s for Denver and Salt Lake City. Also, cooling load from intrastate Texas and the Midcontinent/Midwest were sufficient to have Waha/Permian gas climbing about a dime or more.

A western producer said there was a lot of cooling load from Rockies into the desert Southwest, which helped limit western price weakness mostly to California. But he also perceived some price strength from eastern power generation demand “kind of trickling out west, bringing power prices up” in almost every area. The producer also reported seeing good demand in Chicago with a high in the upper 80s. “This [Tuesday] is probably the warmest day of the week,” with a little cooling trend due to start Wednesday, he said. However, he expected enough regional warmth to remain to keep supporting physical prices until the end of the week.

A Midwest marketer said that judging from the weather map, rainstorms had made much of the South cooler than the North currently. Michigan temperatures were trying to push 90 degrees, she said, while typical for early June is 75. The marketer reported cutting her purchase volumes to less than 1 MMcf/d Tuesday because of prices starting to rise again.

It wasn’t too surprising for the Northeast to be the current bastion of price strength, as a trader in the region said he was looking for 90s highs in his area for at least another couple of days. He didn’t see anything besides new heat to explain cash strength Tuesday, remarking that the screen certainly hadn’t been very supportive lately. However, he said nearly all of the Northeast nuclear plants have returned from spring outages by now, so that should help keep a lid on power generation demand in the near term.

A spot check of traders revealed something of a consensus that cash market activity will be suspended Friday due to Nymex plans to shut down on the day of mourning for former President Reagan. “I don’t think there will be any cash trading Friday,” commented a Northeast marketer. “Everybody I know plans to trade Thursday for four days, and we’ve been given Friday off.” A Midwest counterpart wasn’t quite as certain, but said she is “fairly sure” there will be no cash market Friday.

“Zippo” was a Calgary-based producer’s assessment of how many cash deals he expected to get done Friday. And in contrast to a Calgary neighbor who had said Monday he would be working Friday, even if it was only catching up on paperwork, the producer expected to take Friday off if his company said it was OK. (FYI, the producer admitted there was some grief around Calgary Tuesday because of the Flames [the city’s pro hockey team] going down in flames the night before against the Tampa Bay Lightning in the Stanley Cup championship game.)

Thomas Driscoll of Lehman Brothers expects a storage injection of 90 Bcf to be reported Thursday for the week ended June 4.

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