Even with heating load staying generally on the light side and weaker prior-day futures, cash prices managed to achieve modest increases at nearly all points Tuesday. It was among other market vagaries in which price moves seemed to be at odds with demand realities.

There was certainly no “storm hype” involved as Hurricane Irene continued to indicate no production threat and only reduced demand from cooling off the South Atlantic and Mid-Atlantic regions.

A decline of a couple of pennies or so at Iroquois Zone 2 was the sole exception to pricing that was flat to about 15 cents higher. Only Texas Eastern-East Texas rose by more than about 7 cents.

Nymex traders also were in a bullish mood as they pushed September futures higher by 10.4 cents to $3.993 (see related story).

Henry Hub and futures were much closer to converging after the hub rose only about 3 cents to around $4 while the screen realized a gain to $3.993. The CIG-Henry Hub basis spread widened slightly from 16 cents a day earlier.

Obviously, there was some heat involved in Tuesday’s market firmness. The Electric Reliability Council of Texas (ERCOT) initiated an Energy Emergency Alert Level 1 shortly before 4 p.m. Tuesday because operating reserves had dropped below 2,300 MW. “Capacity is expected to be tight over the peak today [Tuesday], and ERCOT operators are closely monitoring the situation,” the grid operator said.

Despite the Texas heat, Houston Ship Channel and Katy prices were flat. But IntercontinentalExchange said trading activity on its platform at Katy skyrocketed from 220,300 MMBtu Monday to 610,000 MMBtu Tuesday, while Ship Channel volumes rose from 292,700 MMBtu to 371,100 MMBtu.

Irene had strengthened to Category Two overnight but still appeared destined for a northward trek off Florida’s east coast before slamming into the Carolinas. It was close to finishing a voyage north of Hispaniola Tuesday afternoon with maximum sustained winds of 90 mph. Meanwhile, a second low-pressure system still near the Cape Verde Islands off West Africa had joined the previous one that was moving to the west-northwest from about 925 miles west-northwest of the islands into the central Atlantic. The National Hurricane Center gave them odds of 10% and 20%, respectively, of becoming a tropical cyclone within the succeeding 48 hours.

Kern River reported low linepack, but prices into the pipe saw essentially no change from Monday.

Although the South is reheating slightly into mid 90s highs and peaks in the 100s remain the norm from Louisiana-Texas-Oklahoma through much of the desert Southwest, there was little in the general forecast to encourage Tuesday’s minor price gains. Slight warming trends are afoot in the Midwest and Northeast, but projected Wednesday highs in the 80s didn’t hint at any major jumps in cooling load. Meanwhile, the Rockies are cooling a bit with Denver expected to top out around 90, and despite medium-hot conditions in inland California, the rest of the West along with Canada is staying cool to merely warm.

A western trader said flat California prices showed no response to rising temperatures in much of the state. The official start of bidweek was only two days away, but she reported not hearing any talk about September pricing yet.

IAF Advisors analyst Kyle Cooper anticipates a 76 Bcf storage addition being reported for the week ending Aug. 19, which he said would exceed last year’s 40 Bcf volume and the five-year average of 52 Bcf. Stefan Revielle of Credit Suisse looks for a larger injection of 79 Bcf, while Stephen Smith of Stephen Smith Energy Associates said his projection of a 76 Bcf build is up slightly from an original estimate of 74 Bcf.

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