There was a moderate bias to the downside in mixed cash pricing Wednesday, but a record prompt-month daily futures settlement and the possibility of offshore shut-ins posed by newly minted Tropical Storm Katrina were expected to unite all points in major moves higher Thursday.

Many points weren’t far removed from flat Wednesday in quotes that ranged from 20 cents lower to about 15 cents higher. The most prominent price weakness occurred at in the Northeast, which is continuing to experience temperatures below seasonal norms following a mostly very hot summer.

Weather fundamentals in general are somewhat bearish in most market areas, but searing heat remains the rule from western Louisiana and the lower Midcontinent westward through the desert Southwest. Shreveport, LA is expected to see its third straight day of 100-degree-plus highs Thursday, and conditions that caused the Electric Reliability Council of Texas to record a record high 60,279 MW of power usage Tuesday were expected to ease only minimally Wednesday and Thursday.

Nymex saw prompt-month settlement records in both the active natural gas and crude oil futures contracts. The gas screen peaked briefly at $10.02 before settling for a 30.1-cent spike to $9.984, while crude for October delivery soared $1.61 to $67.32/bbl. The heating oil and unleaded gasoline contracts also jumped.

Although it’s highly likely that Katrina will be dumping cooling rains on southern Florida before the weekend (see related story), the heat forecast through Thursday prompted Florida Gas Transmission to keep an Overage Alert Day notice in effect Wednesday. In response, a Florida citygate quote topped $11 Wednesday, exceeding even Northeast delivered numbers, and both FGT Zones 2 and 3 in the production area averaged handily above $10.

There was some hope that Katrina may spare all but the easternmost Gulf of Mexico production area. The National Hurricane Center’s latest projected tracking Wednesday afternoon had the storm turning northward into the Florida Panhandle after crossing the state’s lower peninsula, and the fact that the heaviest rains and winds of a tropical storm tend to occur north and east of its center meant any production impact was likely to be light.

Total outages of both the #1 and #2 1,243 MW Palo Verde nuclear units in Arizona exacerbated gas supply problems in western markets. El Paso continued a Strained Operating Condition through at least Wednesday, and PG&E issued a customer-specific OFO due to low inventory. In addition, Kern River reported low linepack in all segments and asked shippers to realign their supplies to get in balance.

A Houston-based marketer said the screen was just barely above $10 in Access trading late Wednesday afternoon, which supported expectations of higher cash prices Thursday. In addition, the Northeast is due to heat up into the 80s again by Friday from its current moderate conditions, he said.

A Gulf Coast trader said higher cash numbers Thursday were almost guaranteed with Access quotes being slightly above $10. There’s not much weather load in northern market areas currently, he said, but he was still seeing fairly strong power generation load in the Gulf Coast production area, especially after Texas’ electricity demand record Tuesday, and the state is due to stay about that hot into the weekend.

“We’re getting damned expensive gas like everybody else,” said a Northeast utility buyer. He is trying to buy as little spot gas as possible because of high prices, but said he realizes that his company will have to make it up eventually, mostly likely by buying extra baseload for September. He noted that he can buy delivered Canadian supply more cheaply than moving gas up from Gulf Coast, so he is trying to release domestic pipe capacity as much as possible. “It’s worth it to save on fuel costs,” he said.

The National Weather Service (NWS) predicts above normal temperatures for a large swath of the central and northeastern U.S. during the Aug. 29-Sept. 2 workweek. It expects such readings between a line running in a mostly southwestward direction from northwest North Dakota through eastern Arizona and another line starting at the lower edge of the Northeast and running southwest to the southeastern corner of Missouri before shifting south through central Arkansas and catching the northwestern corner of Louisiana and then running to the west through southeast Texas and upper South Texas. NWS looks for below normal temperatures in both the southeastern and northwestern corners of the nation.

A marketer reported hearing September basis talk of minus 26 cents for Chicago and minus 120 cents for Panhandle Eastern. Such major weakness is a result of record-high futures pricing, he said. He didn’t see any chance of the screen tanking between now and Monday because of Katrina’s potential threat.

A Gulf Coast marketer was finding a little interest in September trading already, but it was virtually all in basis or index deals. He said he was not seeing any fixed prices yet. Unless the screen sees a big drop between now and expiration day Monday, traders should expect big index increases, he said.

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