Cash prices rode the continuing tropical storm news and aninitially higher screen to further gains Wednesday, but there weresigns that the big run-up had just about run its course. Mostincreases in the East were between about a nickel and a dime. Whilethat range also held true in much of the West, northern Californiaonce again tended to outpace the general market with dime-or-moreupticks at Malin and the PG&E citygate.

Some sources pointed to a volatile Henry Hub futures contract asan indicator of the bull market coming to an end, noting it finallysettled down almost 3 cents after being much higher in the morning.And a Gulf Coast marketer said Tennessee’s 800 Leg “came off realhard” as people got done early to focus on September business. Hefollowed an initial 800 Leg purchase at just over $3 with a lateone at $2.93.

“This market is getting storm-hyped to death, and I’m sick ofit,” said a Midcontinent source. “Every time the weather guy on TVswirls his hand, the market jumps a nickel.” Observing thatTropical Storm Dennis (still the one closest to the U.S.) isconsidered almost certain to head up the East Coast, he added, “I’msorry for the people in those states, but why should it matter thatmuch in gas trading? We’re not boarding up our windows [in theMidcontinent], that’s for sure.”

The California strength was largely due to the extension of alow-inventory OFO by PG&E (see Transportation Notes), but onemarketer said Golden State prices also continued to be supported bylarge cooling demand. “Our power generation loads [at plants hiscompany acquired from the California utilities in the last year orso] are way up lately.”

A trader hearing low to mid $2.90s September numbers for someMidcontinent pipes said it’s way too early for much fixed pricing.”Why would anybody want fixed-price gas at this point?” he asked.”Index now and protect yourself against a possible plunge Monday.”

September basis is all over the map, a utility buyer said. Hereported doing Transco Station 65 deals at basis of plus 1.5-3.25Wednesday, saying that wide range was largely due to the big rangeexperienced by futures. Other Gulf Coast basis reports included:Florida Gas-Zone 2 at minus 0.5; ANR-Southeast and Trunkline-EastLA at minus 5.25; Transco Station 45 at minus 1-1.25; Tennessee 500Leg at minus 5; Northern Natural-demarc at minus 9; Chicagocitygates at plus 6.5-7; and the Midcontinent in general at minus12-13.

A trader quoting Transco Station 30 basis at minus 3 said thatpoint seemed to be trading “real short for some reason; usuallyit’s around minus 9.” Another source reporting Sonat at minus0.75-1 said that basis was wider than it’s been for several monthsand probably screen-related. He looks for Sonat basis to tightenfairly soon.

A Gulf Coast trader provided some support for bears, saying hethinks Wednesday’s crashes of 50 cents or more in crude oil futuresin all months from October through next April are likely to putdownward pressure on gas prices. Dual-fuel power plants andend-users in New England are almost certain to switch to fuel oilas it becomes a lower-priced alternative, he said.

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