Digit

Wednesday marked the first time in a week that double-digitmoves were nowhere to be found in the cash market. Most pointsregistered small gains of 2 to 5 cents, feeding off a strongfutures screen and a bullish American Gas Association (AGA) storagereport of a 26 Bcf injection.

Following aggressive buying and double-digit increases achievedin Wednesday’s Access trading session, the futures market cooledoff yesterday as physical traders eschewed the opportunity to belong gas at the $2.70 level for the month of August. Once themarket was unable to get past the $2.72 high from Access sellerscame out of the woodwork and demoted the September contract to$2.569, down 3.7 cent for the session.

After Monday’s almost universal double-digit increases, cashprices were on auto-pilot Tuesday, as they trended down from theprevious day’s results. Many traders said Monday’s run-up would bethis week’s high, pointing to moderating weather and the thecompletion of pipeline maintenance projects.

Bears roamed the gas trading woods in full force Thursday,sending cash prices down by a dime or much more at nearly allpoints. The biggest declines of about 35-45 cents occurred at thepreviously high-flying Transco Zone 6 and Texas Eastern M-3citygates in the Northeast. Although some Zone 6-New York Citydeals were still being quoted above $3, the average there fell intothe mid $2.80s.

Adding to double-digit gains achieved Wednesday, the futuresmarket plodded higher Thursday when short-covering activity boostedprices in light, pre-holiday trading. The move left February with atwo-day gain of 16.4 cents, a feat January could not muster duringits entire reign as prompt month.

Triple-digit temperatures throughout much of California inlandfrom the Pacific Coast spurred record energy demand, promptingstate and utility officials to call for voluntary cutbacks inelectricity usage on the eve of the Labor Day holiday weekend.Collectively, August turned out to be California’s hottest ever,further testing the reliability of the new power system in thestate.As Southern California Edison, San Diego Gas and Electricand the nation’s largest municipal utility, the City of Los AngelesDepartment of Water and Power, all registered record power demandMonday, a corresponding record for natural gas delivered toelectric generating plants was marked at Southern California Gas,which transports supplies to all three electric utilities. Gassupplies for power generation equaled 1.92 Bcf/d on Monday,surpassing a one-day record set Aug. 11, 1994 (1.877 Bcf), and aspokesperson for SoCalGas said with the prediction of more hotweather later in the week, “there is a chance we will surpass thenew record.”

A double-digit drop Tuesday on the futures screen had nearly allsources anticipating softer cash prices Wednesday. They were right,at least in Eastern markets where most points fell by amounts oneither side of a nickel. But markets in the West were surprisinglyfirm. With the exception of Permian Basin and Waha gas in theSouthwest, which joined the East in fallbacks of about a nickel,the West was essentially flat to a few cents higher.