Most of what was lost in spot market pricing on Monday wasrather quietly regained yesterday, as storage buying started tokick back in and the weather situation in the Gulf of Mexico onceagain looked ominous, with the possibility of another tropicalstorm or two developing.

Eastern cash and futures prices rallied with most cash pointsmaking gains of more than 15 cents. Northeastern spot points sawthe day’s biggest increases, with more than 20-cent jumps from theday prior. The big news for eastern markets was the Gulf weather.As of 5:30 p.m. (EST), forecasters said a tropical wave in thesouthwestern Gulf of Mexico was looking better organized andconditions appeared favorable for further development as the stormmoves northward over the next 36-48 hours. In addition, thetropical wave that has been pouring rain on Cuba also may gainstrength as it moves west and reaches the open waters of the Gulf.

Temperatures are expected to be in the 90s in parts of theMid-Atlantic today, which could extend cooling demand. But by theend of the week, the region should be seeing much lower lows atnight. A large cold front made an entrance into the Midwestyesterday and should make its way across to the Northeast byFriday. By Thursday, low temperatures in the Midwest, northernRockies and northern Plains are expected to be solidly in the 30sand low 40s.

Meanwhile, despite the western heat, San Juan prices gave upsignificant ground yesterday with declines of almost 25 cents, whichwere attributed to backed-up supply due to El Paso maintenance. Themaintenance evidently caused some constraints and producers wereattempting to get as much of their gas in the pipe as possible priorto further restrictions today, said one western trader (see Transportation Note). “I think some of theproducers were overselling some of their supplies to keep their gasflowing. They kind of shoot themselves in the foot doing that.” SanJuan traded at $4.24 to start the day, but by the end of the morningprices were close to $3.90.

The late summer roasting of Californians continued although at aslightly decreased rate. Temperatures fell slightly and loads,although still strong, were off a little from the day prior. TheISO once again requested power conservation. Power prices continuedto be strong but the ISO lowered its estimated power peak to alittle more than 42,000 MW from an earlier prediction of 43,331 MW.

SoCal prices lost more than a nickel, but remained in the$6.20s. A SoCalGas spokesman said the company has sent out “almosttwice as much gas to power plants” this summer compared to lastsummer. Despite the record load this summer, SoCal still has plentyof supply in storage to meet core customer needs this fall andwinter, he said. Many marketers and suppliers for non-core loads,however, have been drawing heavily for electric generation.Nevertheless, as of the last AGA storage report, working gas in theWestern Consuming region was on par with the five-year average.

PG&E Citygate prices traded down as the day went onyesterday. “People are finding ways to get gas to the gate,” saidone trader. “Supply is coming from the Southwest. Even thoughsouthern border prices are even to or higher than PG&E Citygateprices, if you’re getting allocated in the south because Topock toSoCal or Ehrenburg to SoCal are full, then you send the gas north.Gas coming up the Baja path to PG&E citygate has definitelyincreased.”

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