Despite the AGA’s report of a much larger-than-expected storageinjection of 72 Bcf last week, there was plenty of otherfundamental news to keep this bull market steaming full speedahead. Prices generally moved 5 to 10 cents higher across the boardwith the largest increases in the Midcontinent and Gulf Coastregions.

Perhaps the most significant, but still inconclusive, bit ofinformation yesterday was the tropical disturbance that welled upin the western Caribbean. In the late afternoon, the disturbancewas inching its way northwest between the Yucatan Peninsula andCuba and the discussion at the National Hurricane Center took on amore serious tone. The Hurricane Center said “such a goodpresentation on satellite imagery suggests that this system isstrong and could become a tropical depression or a tropical stormwithin the next 24 hours… Interests in the northwestern Caribbeanand in the Gulf of Mexico should carefully monitor the progress ofthis system.”

“No one is going to want to short this market with the potentialfor a hurricane entering the Gulf,” noted one marketer.

Meanwhile, the market is likely to get a good taste of earlyheating demand as autumnal weather coming down from Canada dropshighs in the Midwest and Great Lakes into the 50s, perhaps even the40s by Friday. Nippy nighttime lows are sure to trigger someheaters in the Midwest later in the week and by the weekend theNortheast also could experience much lower highs and lower lows,according to weather reports yesterday.

Northeastern utilities were turning back some gas yesterday inanticipation of the cooler weather, according to one source. Spotprices in the Northeast actually experienced smaller gains thanpoints in the Gulf, for example. Most of the Northeast points wereup less than a nickel compared to 5 to 10 cent jumps in Louisiana.

The storage injection came in much higher than expectations,which ranged between 50-60 Bcf, according to several sources. Thereported refill for the week ending Sept. 8 was 60% greater thanthe injection during the week prior. As a result, futures pricesinitially plunged below $5. But the realization that storage stillhas a long way to go just to reach historic lows for the season andthat the injection still fell short of the six-year average for theweek (77 Bcf) provided plenty of support in the afternoon.

“While storage levels increased in the West for the first timein seven weeks, we are still well below last year,” noted onemarketer. “Heck, we saw another net withdrawal at both SoCalGas andPG&E storage today.”

The California ISO declared a Stage Two Power Alert, which mayentail voluntarily curtailing 1,000 MW of commercial/industrialinterruptible load. Reason: “Two fires burning near majortransmission lines inMountains in CA and demand from heat being wayhigher than expected, according to an ISO spokesman.”

Most of the West is expected to continue baking throughtomorrow. Highs temperatures still are expected to hold around 110in the desert Southwest and are expected remain in the mid-80s inthe Pacific Northwest.

The strange thing about the California market, said oneobserver, “is that prices continue to defy gravity and stay aboveindex levels. For the first several days of the month, there was alot of selling interest once prices got above first-of-the-monthindex levels. But now there seems to be just as many if not morebuyers. Basis for October at the border is +105-106, whichtranslates into about $6.15, fixed price, so that is not theculprit. Probably the answer is electricity prices, which continueto dictate a mentality in which you buy and burn the gas regardlessof the cost and then make your money back on your electricity. Nextday peak power prices in California were trading at $120-$130yesterday,” he said.

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