Cash prices reversed direction again Thursday for the third time in as many days. Sources cited ongoing storage demand, the previous day’s screen rally and the growing impact of hot weather in the South as factors in across-the-board gains ranging from about a nickel to nearly 30 cents. Most increases tended to be between a dime and a quarter.

There’s a good chance of the bullish mood lasting into the weekend as a warm front spreads northward from the Southeast and traders react to the Energy Information Administration’s report of 80 Bcf in storage injections last week. The volume fit within the general range of previous expectations but was nearer the lower end. Nymex responded with upticks that extended about 20 cents higher at one point, although June futures finished the day with an increase of just over 11 cents.

A Gulf Coast marketer said his perception is that at this point power is “still relatively cheap” in the South, so utilities would rather buy power from others if possible than generate their own with new gas supplies. “That will change soon, however, as it keeps getting hotter,” he predicted. The marketer also commented that his Tennessee Zone 0 quote of $5.54 wasn’t a penny above his 500/800 Leg numbers merely through a fluke of timing. “I think the South Texas [Project] 1 nuke outage is already making its presence felt” in boosting the value of Texas production to make up the power shortfall.

Tennessee’s Zone 0 in Texas is usually discounted at least several cents below Louisiana quotes; witness week-earlier trading on May 1 in which Daily GPI‘s Tennessee Zone 0 average of $5.12 compared with $5.19 and $5.20 for the 500 and 800 Legs respectively. On Thursday the gaps were only a penny or two.

A Midwest utility buyer provided another hint of the nuclear unit’s outage affecting gas prices, saying, “We had somebody asking to buy South Texas gas from us today [Thursday]. That’s very unusual” and may be tied to increasing power generation load for gas as a result another reflection of South Texas 1 being down. Otherwise the market was status quo for the buyer, who said her company was “chugging ahead” on storage and keeping up pretty well with its injection schedule. “It helps that we don’t have any major weather load ahead for the next few days.”

A Northeast utility buyer also was satisfied with his storage situation, remarking, “We’ll be in good shape on storage by the end of summer if we keep up our present rates of injection.” It’s currently a quiet market with “comfortable” temperatures in the region, he said, adding, “We’ve gotten into a period of the year where our monthly loads and storage needs are easy to predict.”

After being the highest-priced Gulf pipeline Wednesday, Florida Gas Transmission saw it’s premium slip Thursday with Zone 3 prices up only 5 cents. The pipeline maintained an Overage Alert Day notice into its third day, although the negative imbalance tolerance was loosened slightly (see Transportation Notes). “It looks like we’re settled in for the summer” on pipeline constraints, commented a Florida utility buyer.

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