Forecasts of high temperatures on either side of 90 in many regions and even greater in the South, Midcontinent and parts of the West revived the spot market by generally small amounts Thursday. A tropical wave was still too close to West Africa to be a factor, but the previous day’s 4.8-cent futures drop had essentially no impact as a negative guide for cash prices.

A few points that fell from 2-3 cents to nearly a dime were the exception to overall numbers ranging from flat to about 65 cents higher. However, the spike at the Florida citygate, where Florida Gas Transmission extended an Overage Alert Day and tightened its imbalance tolerance (see Transportation Notes), was an aberration; other increases topped out around 20 cents.

Most of the largest gains occurred in the West, where Rocky Mountain highs were forecast to be in the 90s Friday, while inland California would be around the century mark and some desert Southwest locations such as Phoenix were due to continue sizzling in mid-110s peak temperatures. Also, Kern River said its linepack was dropping further below minimum target levels.

Meanwhile, despite expected small pullbacks in mercury readings at some locations in the South, most of that region can anticipate highs from the low to high 90s extending as far east as Texas and Oklahoma. The Midwest and Northeast will also be feeling the heat a bit as peak temperatures range from the mid 80s to mid 90s.

The Energy Information Administration’s report of a 78 Bcf addition to storage during the week ending July 9 wasn’t far below consensus expectations in the low 80s Bcf, but Nymex traders took it as bullish news and ran with it all the way to a 28-cent spike in the August prompt-month futures contract (see related story). That, combined with the predictions of continuing hot weather, portend likely increases in most if not all of the weekend cash market.

As a reminder about predictions of a very active 2010 Atlantic hurricane season, a large tropical wave about 400 miles west of the Cape Verde Islands was moving westward at 20-25 mph Thursday, the National Hurricane Center (NHC) said. The system had only limited shower activity, the agency said, but environmental conditions were expected to gradually become more conducive for slow development. However, as of Thursday afternoon NHC was giving the wave only a low (10%) chance of becoming a tropical cyclone in the next 48 hours.

The rising heat levels aren’t very good for storage injection spreads, a Midwest marketer said, but they do help promote price volatility, which his company appreciates. It is getting more demand from power generators late this week as cooling load increases, he said, adding that he was hearing that high temperatures in the Midwest may last through most of the rest of July.

Saying the storage report didn’t seem all that bullish to him, the marketer speculated that short-covering may have played a part in the subsequent big futures run-up. He said the eastern Atlantic’s tropical wave was still much too remote to arouse any trader discussion yet.

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