News of a tropical wave approaching the Caribbean Sea, generally warm to hot weather in most of the nation, the end of weekend OFOs on several pipes and the usual rebound in load following a long weekend were cited by sources in explaining Monday’s double-digit gains at nearly all points.

One also mentioned that not all traders had returned from time off associated with the Fourth of July holiday, and others were finding distraction in the Calgary Stampede rodeo festivities this week, so the resultant tighter liquidity may have exaggerated some price jumps.

A western utility buyer pointed to a late run-up in natural gas futures as reason to expect higher prices again Tuesday. “The screen was trading [in the low $5.20s] for most of the morning,” she said. “Then, once cash business was done, it jumped up 15 cents.”

Monday’s price increases were sizeable at 15 cents or greater in virtually all instances, with a Sumas uptick of only about 2 cents as the conspicuous exception. Most ranged between 20 and 40 cents, while points as geographically discrete as Sonat, Transwestern-Permian and the Southern California border led the pack with advances of nearly half a dollar.

A Midwest utility buyer commented that “we’ve had some warmth in recent days, but not enough to make us need new gas since last week.” He reported getting an inquiry Monday seeking same-day gas on Northern Natural Gas to make up for a shortfall on NGPL, “so maybe that indicates tighter balancing requirements by the pipes.”

Another Midwest source expressed some surprise at regional citygates staying relatively weak in comparison with the overall market, which tended to see larger gains than those on either side of 20 cents for Midwest delivered gas. However, “it is going to cool off around here in a couple of days,” which may have accounted partially for the lagging citygate numbers, she added.

In addition to western heat inland from the West Coast, covering short weekend supply positions resulting from OFOs by California’s two biggest LDC systems accounted for some of the West’s price strength, a marketer said.

A marketer in the Midcontinent said he had no deals to report. “Usage was down more than we predicted over the weekend, so we have extra fuel to burn, so to speak.” It’s hot in the area, but the marketer said he was not seeing proportionate power generation demand. “But with [cash] prices as firm as they were in the morning and watching the screen rise now, I’ll guess there is demand out there somewhere,” he added.

Something that may limit further price increases in the Rockies this week was the announcement by Burlington Resources that production has resumed from two wells at its Madden Field in Wyoming and that the Train II unit at the Lost Cabin Processing Plant has restarted (see related story). The two wells are flowing at 65 MMcfe/d, yielding plant natural gas output of 40 MMcfe/d, the producer said. It had shut in the field’s producing wells and the processing plant last month as a safety precaution after pipe deformations were found in the sour gas gathering system (see Daily GPI, June 23). Plant inlet capacity is normally about 310 MMcfe/d, with approximately 200 MMcfe/d of treated sales gas capacity.

The National Hurricane Center said that as of Monday morning, conditions of a “strong tropical wave centered about 170 miles east of the Windward Islands” were changing little. There were some indications that the system, moving westward at 20 mph, was starting to lose some organization, NHC added, but the possibility of tropical cyclone formation was not out of the question.

Lehman Brothers analyst Thomas Driscoll predicted an injection of 95 Bcf in this week’s storage report, which he said would compares to a 67 Bcf injection last year and a five-year average of 73 Bcf. Driscoll went on note that last week’s announcement by National Oceanic and Atmospheric Administration “that it was 5% colder (Nov. 3-March 29) than first thought last winter leads us to conclude that last winter’s (weather-normalized) storage withdrawal totals were about 200 Bcf greater than five-year averages. This implies that the industry should target ‘high-normal’ working gas levels going into winter. We believe that we are on track to get to a ‘high-normal level of about 3,100 Bcf.”

Analyst Kyle Cooper of Citigroup said his final estimation for the storage report is for an injection of 96-106 Bcf. “We lowered our initial estimate [‘to exceed 100 Bcf and probably closer to 110 Bcf’] as temperatures were warmer than expected.” Cooper said his confidence in the final estimation is quite low. “Not only does the [Fourth of July holiday] affect demand, but with the [Fourth] on a Friday, it also becomes an issue to determine whether storage estimations were made before staff left on Friday for the holiday.”

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