In what traders called a purely screen-driven cash market,prices achieved double-digit increases at virtually every pointexcept for PG&E citygates, which rose by a little less than adime.

Physical prices not only got support from natural gas futurestacking on another few cents Thursday to its Wednesday afternoonspike, one source pointed out, but also received a bit ofpsychological backing when crude oil and heating oil futures madespectacular gains. Crude oil numbers for June rose slightly morethan a dollar to get back on the plus side of $29/bbl.

Traders in most markets agreed that quotes tended to risegradually throughout the course of the morning. Not so withNortheast citygates, though, said one marketer. Demand almosttotally disappeared after buyers finished making purchases aroundmid-morning, he said. Transco Zone 6-NYC deliveries, which had beentrading in the low to mid $3.70s, dropped to about $3.60 neardeadline, the marketer said.

During the first two days of this week, cash was driving itselfbecause of the high air conditioning demand created by the EastCoast’s heat wave, a Houston-based source noted. But over the lastcouple of days, it’s been futures doing the driving, he added.

Henry Hub, which had traded 12-13 cents less than where the Junefutures contract eventually wound up Wednesday, played remarkablecatch-up Thursday to converge with the screen in the mid $3.30s, aGulf Coast trader noted.

Texas is starting to experience a mini-heat wave of its own, anaggregator said, and that is generating considerable intrastateprice strength, especially at Waha and Katy. Both points were up alittle more than 15 cents.

Intra-Alberta numbers were running over the C$4 level, a Calgarymarketer said. He was dubious, however, about “how long these highprices can hold up.”

Questar is not allocating storage injections into Clay Basinduring the week, according to one source. However, because lowerweekend demand has many Rockies traders buying more gas targetedfor storage, it’s looking increasingly likely that Clay Basinallocations will remain necessary for weekends through the rest ofthe summer, she said.

It’s beginning to look more and more as if anemic storage levelsare going to be a real problem, said a Midcontinent trader. “Thosepower guys [utilities and independent generators] could get reallyhurt this summer because the gas might not be there, and switchingto fuel oil is going to be quite an expensive proposition. It showshow sensitive this gas market is to weather, either very hot orvery cold.”

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