Apparently Tuesday’s general flatness was just the cash market’s way of taking a breather, because prices were back on an upward track Wednesday. With some exceptions, such as mild Rockies softness and small upticks at a few other points, the gains were remarkably consistent throughout most of the market at 10-20 cents or so.

Sources attributed the cash advances primarily to an initially much stronger screen and to a lesser degree to some doubt surfacing about how large a storage injection the EIA will report Thursday morning. After probing as high as $6.61 in the early going, July gas futures later retreated into negative territory before finishing the day up 1.5 cents. A report of rising crude inventories put downward pressure on the crude oil and heating oil contracts, with crude settling just above $30/bbl.

There certainly was no increase in fundamental support on which to hang higher prices. The Midwest and Northeast still have no significant change in sight from their unseasonably cool spring, a stormy cold front that reached the Gulf of Mexico was quelling Southern air conditioning load in its wake, and the already moderated Rockies led what is expected to be a general cooldown in the West.

For now the desert Southwest remains the sole repository of major hot weather exceeding 100 degrees. However, The Weather Channel said parts of the Pacific Northwest are likely to see record or near-record highs in the 90s Thursday and Friday.

“It’s because prices have nowhere to go but up!” a marketer joked when asked about Wednesday’s renewed price strength. Actually, he continued, “I think the technical traders wanted higher [screen] prices and got them,” while cash went along for the early morning ride. The Nymex retreat didn’t start until after most cash finished trading, he said, but it was rather surprising when the remaining cash deals didn’t fall along with the screen.

“We’re going to get to seven bucks on the screen sometime soon, then we fall hard,” the marketer predicted. “It will be getting to mid-July, and people will realize that storage is OK and we’re not going to get a hot summer; that’s when the crash happens. The market always corrects itself.” About the only demand he knew of at this point was some lingering heating load the Midwest.

Lack of volatility was a hallmark of virtually all of Wednesday’s market, according to several traders. The marketer said while he expects more screen strength, he doesn’t think cash will follow as quickly as usual and thus he thinks the cash/screen spread to widen. Finally, he concluded, “People have so much room available for storage and are using it, so I can’t see cash falling much near term. But after several weeks of 100 Bcf or so injections, there won’t be so much room left, and prices will head down.”

A Northeast trader said some of the region’s power plants might not start running full-tilt until the end of June, whereas until recently they had been expected to be at full operations by mid-month. “The spark spreads just aren’t there,” he said. “Just think if we had had an early summer or warm spring, what would have happened with storage? A scary possibility.”

A marketer said he knew an Overage Alert Day by Florida Gas Transmission wouldn’t last long (see Transportation Notes) “because there’s too much rain in Florida.” He sees Gulfstream “more as a cap on FGT prices than as a real competitor,” explaining that most shippers to the Florida market prefer FGT until its cost starts to surpass Gulfstream’s.

A Midwest marketer expressed relief at Nymex’s abandonment of its early spike, saying, “We needed that.” He added that his “gut feeling” is that EIA will report a last-week injection of 120 Bcf and prices will crash subsequently. However, he said, “It still looks better to buy storage now instead of waiting.” One problem, though, is that hedging costs for storage “have gotten almost impossible to make them work, so I am looking for alternatives.”

The PG&E citygate managed to climb about a nickel despite the utility’s issuance of a high-linepack OFO (see Transportation Notes) for Thursday. SoCalGas, whose border numbers rose about a dime, did not declare an Overnominations Day.

In its forecast for the June 9-13 period, the National Weather Service expects above normal temperatures for a strip of states from the lower Northeast along the East Coast, Gulf Coast and into New Mexico. Similar conditions are predicted from the Pacific Northwest through Nevada. Below normal readings are likely along the coast of Central and Southern California, and in the Upper Plains and western Midwest, NWS said. It looks for normal temperatures in all other areas.

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