The dazzling increases in cash prices Thursday certainly failedto surprise anybody who was paying attention Wednesday afternoon tothe storage report and the screen’s subsequent skyrocketingperformance.

Cash price hikes were uniformly 20 cents or more, with thehigher ones of about a quarter to 30 cents concentrated in westernmarkets, where heat in the desert Southwest and outages of nuclearand coal plants were boosting Palo Verde power prices andcontributing to air conditioning load for gas. Several Northeastcitygates were starting to edge over the $4 level, and Californianumbers weren’t far behind in the vicinity of $3.90. Intra-Albertatraded from the $4.40s through the $4.50s, said a Calgary marketer.

Despite the report of higher Palo Verde power prices, a largeaggregator said electric numbers in California’s mild weather wereonly marginally supportive of higher gas prices, trading around$44/MWh yesterday for today’s peak. But he looks for Golden Statedemand to pick up after the weekend “if one is to believe theforecasts for hotter weather.”

Even though the screen was only marginally higher Thursday, itsspike Wednesday combined with large gains for crude oil and heatingoil futures Thursday to create a huge amount of psychologicalsupport for cash numbers, sources said. Crude rose a little morethan a dollar to wind up the day over $30/bbl.

The entire energy futures complex was strong, one marketernoted. High oil prices can lend strength to the gas market, headded, but it doesn’t work the other way around; that is, high gasprices mean little to crude traders.

Cash was up significantly, but not as much as one would expectafter a rally of nearly a quarter in futures, a Texas source said.Gulf Coast prices opened strongly but ultimately fell back once itclear that the futures market was unable to attract much in the wayof follow-through buying. Another trader also noticed latesoftening in Chicago citygates. But a western marketer said thetrend was higher there throughout trading. The Southern Californiaborder stayed most of the morning in the upper $3.70s, he said,then moved into the low $3.80s “and in a blink shot up to around$3.90.”

A Gulf Coast trader said he’s noticed a shrinking base ofsellers at Henry Hub. Those marketers who came into May long at theHub index of $3.08 are tending to hold onto their length, puttingthe gas into storage rather than selling even at current levels, hesaid. That perpetuates the rise of cash quotes by taking supply offthe market, he added. Henry Hub was trading Thursday mostly in thelow to mid $3.70s, more than 60 cents above index.

A Houston-based marketer noted “a barrage of things” supportingthe cash market, including recent deliverability studies, Congressurging more pipe capacity into the Northeast and Pennsylvania’sgovernor calling for cleaner power generation in the state.

One marketer suggests there are competing forces weighing on theweekend market: cooling temperatures, especially in the Northeast,but a futures screen poised to hit $4.

Even with the market so much higher, one trader said Chicagocitygate basis was firming from plus 3.5-4 in the May bidweek toplus 5.5-6 for June.

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