Scorching southern heat, northwestern cold and mild temperatures in the Midwest and Northeast provided a wide variety of weather fundamentals for the cash market Tuesday, but prices climbed up another 20-50 cents largely in response to continued futures market gains, in particular a new all-time high for near-month crude oil futures.

May natural gas futures jumped above $8 Tuesday for the first time since early February and settled at $8.008, up 43.1 cents from Monday’s close. The impetus for that move obviously came mainly from crude oil which soared to another new all-time high of $71.60/bbl before settling at $71.35, up 95 cents for the day.

But some of the natural gas strength also stemmed from the unusual heat in Texas, where rolling blackouts hit the grid on Monday. The Electric Reliability Council of Texas (ERCOT) said its grid broke the all-time April peak demand record Monday with a preliminary estimate of 51,714 MW. The all-time system peak is 60,290 MW, set Aug. 23, 2005, during the traditional summer peak season.

“We were caught in a generation shortfall due to the fact that this heat wave occurred during a time of year when temperatures are generally mild and demand for electricity is normally low,” said Sam Jones, ERCOT chief operations officer. “Consequently, many generation plants were down for maintenance, which is typical during April, a traditional ‘shoulder’ month when temperatures are typically mild.”

Temperatures were expected to reach 92 in Houston and 100 in Dallas Tuesday. “It’s supposed to cool down about 10 degrees toward the end of the week,” said a Texas marketer, but high temperatures in some Texas cities already are 20 degrees above normal.

Meanwhile, the Northwest is freezing with highs 20 degrees below normal. Lows in quite a few Northwestern cities were in the 20s. That has led to larger than normal price spreads between markets and supply basins in the Rockies. “The price spreads between the south part of Northwest Pipeline and the northern part tightened up quite a bit today probably because of Clay Basin resuming injections and the cold weather we’re seeing in Utah,” said a Rockies marketer. “We saw Opal around $5.70 while Sumas was in the upper $5.90s. Yesterday we saw almost 50 cents in that spread so it’s already narrowed 15 to 20 cents.

“We’ve had low linepack on Questar so we’ve been forced to go and take more gas to our end-use customers there,” he said. “It’s been unseasonably cold out here, especially in Utah over the last few days.” People also were scraping ice off their windshields in Portland Tuesday morning.

In the Midwest, Chicago cash points continued to make large gains as Nicor maintained restrictions on citygate deliveries on Alliance, ANR, Midwestern, NGPL, Northern Border and Northern Natural. In another notice to shippers, Nicor said that warmer than normal temperatures throughout its service territory caused a reduction in demand and problems for operating conditions due to high storage levels and system linepack.

Alliance deliveries were up more than 50 cents from Monday while prices on other pipes rose nearly 40 cents. “They are just basically keeping us out of the market,” said a Midwest marketer regarding the actions taken by Nicor. “I had released capacity to the Nicor citygate this month and nomed some stuff for today’s flow and one-third of it got cut. They are cutting some large percentages. It’s frustrating. I’d like to find some storage space for this gas but fields are filling up so quickly.”

Early predictions for Thursday’s gas storage report are pointing toward an injection somewhere around 50 Bcf, which would be on par with injections during the same week last year. Global Insight is forecasting a storage injection of 48 Bcf in this weeks report by the Energy Information Administration. Consultant Ron Denhardt of Strategic Energy and Economic Research said he is forecasting a 52 Bcf injection for the week versus a five-year-average injection of about 33 Bcf.

“Working gas storage is now 430 Bcf above last year. Yet, high oil prices continue to support natural gas prices,” said Denhardt. “It may be until September or October before market prices reflect the large amount of gas in storage. Further, oil prices may be high for sometime.”

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