Warm weather and continued strong demand from gas-fired generators filling in for downed nukes and coal units took most of the blame for cash price increases of 5 to 10 cents at most locations and stronger Northeast and Midwest basis on Tuesday. Sable Offshore Energy Project supply remained constrained due to ongoing repairs on a compressor at the Goldboro Plant in Nova Scotia, which held back about 23% (up to 105 MMcf/d) of Maritimes & Northeast volumes.

However, Dracut prices were pretty flat compared to Monday. Other northeastern points gained about a dime on average with Tetco M3 and Transco Z6 topping the $5.60 mark.

“Dracut started out about even with Tennessee Zone 6,” said a New England utility. “There was no reason to be buying at Dracut and bringing it to the citygate. Might as well buy Tennessee Zone 6. Dracut is normally a 10 to 20-cent discount in the summer. Obviously they are still having supply problems.

“But I didn’t have nearly the buyers that I did yesterday. Prices still went up. We are supposed to have continued heat, so it’s hard to say what the rest of the week will bring. I think we’re still in somewhat of a precarious situation with Northeast power. All predictability is out the window.”

She said Dominion South for Wednesday flow was up about 5-7 cents, but intraday sales were able to attract a 15 cent premium compared to Monday. Temperatures were five to 15 degrees higher in New England on Tuesday compared to Monday, and temperatures throughout the Northeast are expected to be in the low 90s Wednesday, Thursday and Friday.

Meanwhile, the heat in the Midwest kept peaking plants running and basis strong. “Chicago cash was pretty strong compared to Nymex, but in terms of actual volumes traded at Chicago, it was quiet so I’m not sure how much longer we’ll hold at these price levels,” said a Canadian producer. “There is a lot of heat right now in the Midwest and the plants are all up, the peakers are up and running because the nuclear plants aren’t.

“Chicago bounced up against variable costs to Dawn and MichCon, and it hasn’t been close to that in awhile,” he said. Chicago was in the mid-teens and Dawn was running slightly above $5.20. Midcontinent prices were up about a dime from Monday in the low $4.90s. “I think Chicago basis will come back down. It traded about 20 over Nymex today, and I can’t imagine that hanging on. It was only a dime over Nymex early Monday.”

He said Columbia Gas (TCo) basis rose about 7 cents to about plus 20. “Basis was up at all the points. Maintaining that depends on whether the nuclear units come back on time. There are still some down in Michigan and in the Niagara region. In Ontario, they are waiting for some to come back up,” he noted. Detroit Edison’s Fermi 2 unit was only back up to about 4% power on Tuesday. In New York Indian Point 3 remained at zero power Tuesday. The New York Power Authority’s Fitzpatrick 1 unit was back up to 95% capacity. Nine Mile Point 1 and 2 were ramping up but not yet near full power.

If the remaining nuclear units come back and the market gets another large weekly gas storage number, most observers see prices reversing direction. But there are a number of factors that will make predicting the storage numbers both this week and next a little more difficult than normal, noted one observer.

“I’m wondering how much gas made it into storage those couple days when the power was out, and how much they drafted off after all these peakers came on line,” said a Gulf trader. “There also was Tropical Storm Erika which took off some western Gulf production. That should be reflected in next week’s report.”

Another observer said he doubts that prices will “come crashing down, but I do wonder if the impending storage estimate will cause people to scale back in anticipation of a large injection and possible subsequent screen dive. If not, and prices continue to run up Wednesday and into Thursday, we could see a big drop after the EIA report comes out.”

Rain already has started to help cut generation-related demand in a number of areas, including the Southeast and Southwest on Tuesday. Prices in the San Juan Basin were flat to down a couple cents because temperatures in Arizona dipped below 100 degrees due to the rain. “Temperatures were much lower and demand was down somewhat,” said a Southwestern utility. “We still bought plenty for tomorrow. We expect demand to come back up with the temperatures.

He reported Blanco prices in the mid-$4.60s and Permian about 25 cents above that. Cash prices in the Rockies were also flat to down a few cents. “Temperatures are pretty mild,” said a Rockies utility buyer. “Storage is doing fine. We’re actually near the top end of our target.”

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