Prices softened as expected Wednesday in response to partialabatement of the heat wave that plagued the Northeast and MiddleAtlantic earlier this week. But based on the sharp spike in futuresfollowing the afternoon release of AGA’s storage report, sourcesshowed no hesitation in saying they expect cash to return to anupward direction today.

Most of Wednesday’s price declines were small, ranging from onlya couple of cents in California to a nickel or so in nearly allother markets. The larger drops of about a dime or more occurred atNortheast citygates, which were losing the support ofway-above-normal cooling demand.

The heat was subsiding substantially in the Northeast, “but wedidn’t see much evidence of air conditioning load being replaced byheating load,” one marketer said. However, he continued, that mayhave happened in the Boston area, where reportedly it was gettingchilly enough that some people might be turning on furnaces again.Meanwhile, it was cooler in the Middle Atlantic but not by much.

Several sources were marveling at the “running of the bulls” onthe futures screen in the afternoon. A small screen deficit in themorning while cash was trading had turned into a gain of more than13 cents by the day’s settlement. The huge turnaround was anobvious reaction to AGA’s report of 58 Bcf in storage injectionsduring the previous week. “I didn’t really think it was a verybullish report myself,” a producer said, “but you have to trust thejudgment of those folks in the Nymex trading pit. Don’t you?”

Although the 58 Bcf figure fit in well with most expectations,the Nymex spike must have been a case of people looking ahead tonext week, several traders told NGI. “Because of the heat this weekcreating so much gas demand, there obviously must have been somewithdrawals from storage to meet that demand,” a large aggregatorsaid. “That means people are expecting a very low injection figurenext week, and we’ll just be further behind on storage refills withJune not all that far away.”

Speaking of June, a marketer noted that June 1 marks theofficial beginning of the 2000 hurricane season. “Just think ofwhat could happen to prices if a Gulf of Mexico hurricane comesalong this summer at the same time as a heat wave more widespreadthan the one this week occurs,” he said. And remember, he added,this week’s heat came well before the normally hottest months ofthe year: July and August.

A Calgary source quoted a wide C$3.79-93 range forintra-Alberta, saying it was due to the afternoon run-up at Nymex.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.