A full-fledged heat wave across the southern tier of states, getting a modest assist from the previous day’s screen rise, turned the cash market around Wednesday for a mostly mild rally. Even with slight cool downs due Thursday in the Rockies, conditions will remain hot enough that most of the largest gains were recorded in the West.

Rebounds were almost imperceptible in much of the East, with quotes ranging from flat to up about a dime and a large majority at a nickel or less. A couple of eastern points even saw moderate retreats. In a greater show of strength, western markets rose from a little less than a dime to about a quarter.

The Midwest and Northeast continue to see subpar temperatures that belied last week’s forecasts for rising temperatures in those regions. Nevertheless, they were forced to compete more fiercely for available supplies with the Midcontinent and Gulf Coast production areas, and thus were pulled upward slightly despite weather fundamentals that would have indicated further softness.

“I have no problems at all placing my gas these days,” said a marketer who trades Louisiana gas. “If I could buy more, I could sell more.” She confessed to a little surprise that cash numbers hadn’t strengthened more than they have, but concluded that until the northern market areas join the rest of the nation in normal midsummer heat, the price upside will remain limited. She added that she expects the current mild rally to stall unless the Energy Information Administration comes in with a storage injection volume Thursday that falls short of prior expectations.

It’s still a little on the cool side in the Midwest and supposed to stay that way through the weekend, a marketer said. She noted that the MichCon and Consumers Energy citygate spread was tightening a bit after having been more than a nickel apart earlier this week.

The cooling load theme was echoed by a Texas-based trader. “It’s gotten hot enough in all the areas we trade — Southwest, Midcontinent and intrastate Texas — that we no longer have to call customers to see if they want any gas. They call us first now.” She said her company doesn’t try to understand the “why” of certain market movements, such as ANR Southwest and NGPL Midcontinent going up about a dime Tuesday while Panhandle Eastern fell 20 cents. Instead its traders just come in each morning, check the differentials being established between various points and trade accordingly, she said.

Rains have given the East a reprieve from normal summer heat recently, but the addition of more moisture to the ground and air will only exacerbate heat indices in the weeks and months ahead, according to a Weather 2000 advisory. “Looking at the entire 2004 CDD [cooling degree day] season to date, most east-half of the U.S. locations are posting 2-10% more CDDs than average, and 20-40% more CDDs than 2003,” the New York City-based consulting firm went on.

“Although more numerous than last year, extreme afternoon temperature occurrences are obviously suppressed due to the high water vapor content of various levels of the atmosphere, and the recent rains will only prolong this trend. Warm and muggy still look to be the operative words over hot and dry, over the course of two-week and four-week increments…There are signs that some warmer reversals of fortune may be headed the way of Quebec, Ontario and the New England states later in July, emphasizing the danger of writing off seasonal conclusions until July and August have run their full gamuts.”

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