As expected after a 41.1-cent spike by June futures the day before, prices increased at nearly all points Wednesday. Only a drop of about a dime by Transwestern in West Texas averted an across the board run of firmness.

Gains ranged from 2-3 cents to about half a dollar, with a large majority of them in double digits. Most of the smaller upticks occurred at Southwest locations, where previously high heat levels are dropping considerably. For example, Phoenix’s high in the mid 90s Wednesday was forecast to be followed by one around 80 Thursday.

Hot weather in the South is slowly building, especially in Texas, but has yet to reach temperature levels in most sections that would result in the dispatch of many gas-fired peaking generators. While Texas will continue reaching the 90s Thursday, peak temperatures in neighboring Louisiana will drop to the low to mid 80s.

The Midwest and Northeast are examples of almost purely screen-driven price gains. Temperatures are staying seasonal with highs mostly in the 60s, so there is likely only minimal heating load.

Despite PG&E warning of high linepack Wednesday and following up with a high-inventory OFO for Thursday (see Transportation Notes), the PG&E citygate and Malin both rose about a quarter.

One factor that kept Southwest gains small was El Paso’s quick lifting Tuesday of a Strained Operating Condition that had been prompted by low linepack from shipper drafting (see Transportation Notes).

The cash market can count on strong prior-day screen support again Thursday after the June futures contract added another 27.5 cents to its value Wednesday. Once again, though, the Nymex fireworks were occurring over in the crude oil trading pit, where the new prompt-month July contract extended a string of record daily settlements by closing above $133/bbl (see related story).

Prices went pretty high Wednesday, and it was almost all due to the futures example from a day earlier, a Gulf Coast producer said. Only a little cash strength could be attributed to weather fundamentals, he said. Cooling load is picking up a bit in the South, but heating load remains on the light side in northern market areas.

The producer perceived an up-down-up pattern in cash trading Wednesday. He sees one more day of cash strength Thursday from continuing strong screen support, then major weakness Friday in trading for the Memorial Day weekend.

A Calgary-based producer was thinking along much the same lines as his Gulf Coast counterpart. Crude oil has become the driving force for both futures and cash in the gas market, he said. He was still seeing a little heating load at night in Midwest, but it’s marginal, he said. Maybe next week the region will start experiencing a tiny amount of cooling load, he added, but it probably won’t be till June before it gets hot enough to matter for gas demand.

The Canadian producer agreed that cash should be stronger again Thursday but then get “very weak” for the long weekend.

Heat will be concentrated in the south-central part of the U.S. next week, according to the National Weather Service (NWS). In its six- to 10-day forecast for the period from Memorial Day through May 30, the agency predicts above-normal temperatures from the eastern half of New Mexico through eastern Alabama and extending northward to southern Nebraska and Iowa, northern Illinois and central Indiana. NWS also looks for above-normal readings in the western half of Washington state and northwest Oregon. Below-normal temperatures are forecast for northern Maine; the southern half of the Florida peninsula; from eastern Montana to the northern edge of Wisconsin and dipping into northern South Dakota; and in the southern two-thirds of California along with most of Arizona, southern Nevada and the southwest corner of Utah.

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