The weather picture is still decidedly bearish in the Midwest and Northeast market areas, but the cash market was able to cobble together a substantial rebound at all points from last week’s five-day losing streak Monday. A fresh surge of activity on the Atlantic tropical storm front and a trend of gradually rising temperatures in the South starting Tuesday provided the main support for higher numbers.

Energy futures strength Monday, including new crude oil records, and the continued development of potential storm threats to Gulf of Mexico production are expected to keep cash on the rise Tuesday.

Monday’s gains were as small as about a nickel at several scattered points, and intra-Alberta quotes could manage only a flat performance, but double-digit advances predominated and ran as high as about 30 cents. Northeast citygates and the Waha/Permian Basin market made the greatest shows of strength.

The former Tropical Depression Two, which had been written off as a market influence going into the weekend after weakening to a tropical wave, got its second wind (so to speak) and became Tropical Storm Bonnie — the season’s second named storm, obviously — in the southern Gulf of Mexico Monday afternoon, according to the National Hurricane Center (NHC). At 4 p.m. CDT its center was about 410 miles south of the mouth of the Mississippi River. Bonnie was moving toward the northwest at nearly 12 mph, with a gradual slowing and turn to the north anticipated Tuesday. Maximum sustained winds were near 45 mph.

Wait, there’s more. Tropical Depression Three (TD3) moved into the extreme southeastern Caribbean Sea Tuesday afternoon at nearly 22 mph in a westerly heading. Its center was about 30 miles southwest of Grenada at 5 p.m. AST, NHC said. Maximum sustained winds of almost 35 mph were expected to strengthen within 24 hours, meaning gas traders could be monitoring Tropical Storm Charley during Tuesday’s session.

The natural gas screen rose just over a dime, but once again it was overshadowed by fireworks in the oil product trading pits. Crude for September delivery once again recorded all-time intraday ($44.98/bbl) and daily settlement ($44.84, up 89 cents) highs. Supply worries continued to boil in two areas: continued violence was estimated to have cut oil export capacity by 10% in southern Iraq, and the ability of Russian giant Yukos to continue deliveries became even murkier after a Russian railway firm refused to extend the producer further credit.

There’s sure a lot of stuff going on in this market, said a Northeast trader in understatement. “You’ve got oil making new record highs, and people are keeping an eye” on the two tropical systems, with Bonnie the greatest cause for concern at this point, he said. Northeast weather contributed little to citygate spikes Monday, he said, with seasonal to below seasonal temperatures “that feel a lot like fall.”

Regional peak power prices are getting slaughtered, the trader went on, causing gas generating units to get taken off line. As best he could tell, most current buying is for storage “along with a little swing burnertip demand.” Temperatures will be warming up in the Northeast later this week, but the six- to 10-day and 11- to 15-day forecasts still look cooler than normal, he said.

A Calgary-based producer said the weather had actually gotten cold enough in Alberta to have some heaters kicking on at night. “Recently, we’ve seen it get as low as 5 degrees C. [about 40 F.],” he said. Thermometer levels should get seasonal again toward the weekend, he said, but that will basically just take provincial weather load to near zero. He noted that Westcoast Station 2 was in the unusual position of trading nearly C15 cents higher than Aeco Monday, saying NOVA “got a little nervous” about rising linepack over the weekend “and decided to nip it in the bud” by taking imbalance tolerances to 0/-4 for one day (see Transportation Notes).

High temperatures in inland California helped bolster western markets, with the state electric grid operator’s curtailment of plant maintenance and predictions of another record peak power load (see story in Power Market Today) as evidence of strong cooling demand for gas.

Lehman Brothers analyst Thomas Driscoll expects a storage injection of 85 Bcf to be announced for the week ended Aug. 6.

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