Dennis and Emily joined Cindy Tuesday as the latest namedtropical storms in the Atlantic, and cash prices responded byresuming a climb that had faltered slightly as the week began.Nearly all eastern gains were at least a nickel or greater, withsome points rising by double digits. Somewhat surprisingly,however, most of the dime-or-greater increases occurred in theWest, led by one of nearly 20 cents at the PG&E citygate. TheCalifornia market in general was boosted as Pacific Gas &Electric threw something of a curveball at traders: instead of thefrequent high-linepack OFOs this summer, the one that takes effecttoday is for low linepack (see Transportation Notes).

Now that it’s finally gotten going in earnest, the hurricaneseason shows little sign of let-up. Cindy was still too far out inthe Atlantic to threaten any land masses Tuesday, but it was beingfollowed westward by a tropical wave off West Africa that showedpotential for development. Emily was more than 350 miles east ofthe Windward Islands yesterday afternoon, so it also posed noimmediate threat to the Gulf of Mexico. Of most immediate concernwas Dennis, which caused the posting of storm warnings for much ofthe Bahamas.

More than one source expressed amazement at the price levelsbeing hit lately, saying they were unable to recall the last timeeither the overall market and/or specific regions were this high.”I guess it’s caused by the storms,” said a Gulf Coast trader, “butI’m kind of perplexed after hearing [Hurricane] Bret caused more ofan oil production problem and not that much cutback of gas.” Awestern marketer said she couldn’t explain the price strength, “butI don’t really mind. To me trading is easier when prices are risingthan when they’re falling.”

Nothwithstanding the PG&E OFO, another trader was surprisedto see Tuesday’s biggest price hikes in the West, which she hadconsidered somewhat remote from the Atlantic storm situation. Butothers noted that continuing agricultural harvest load and hotweather in California have kept demand rising there recently.

To a Midcontinent source, weather-related electric generationhas held the key to the gas market during August. “All month long,we’ve been supplying 40-50 MMcf/d for power generation into theOklahoma pipes,” he said. “That demand has been worth at least 3-4extra cents for prices on those pipes. Now I know we would be intothe $2.90s [in the Midcontinent] without $3 futures, but power loadhas added even more incentive to buy.

“There certainly will be storage demand coming up,” he went on.”We’ve had so many 100-degree days in Oklahoma, and there should bemore. As long as they [very hot days] are around, people will bepulling gas from storage to meet the demand. I think [production]depletion is behind it all. No drilling is going on. People talkabout supply replacements, and I just don’t see it. We startedbuying gathering lines a few years ago, and wellhead supplies were30-40% higher than they are now.”

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