Physical natural gas for Wednesday delivery once again outperformed the futures in Tuesday trading as the ongoing heat in southern California as well as gains in the Northeast offset weaker quotes from the Midcontinent, Texas, Louisiana, and Appalachia. The NGI National Spot Gas Average added 2 cents to $2.74.

Futures were limited to less than a 4 cent range in something of a dead cat bounce off Monday’s 14 cent swan dive. At the close July had risen 1.3 cents to $2.907 and August was equally uninspired, adding 1.3 cents to $2.930. The expired July crude oil contract finished at $43.23/bbl. down 97 cents.

Southern California posted the day’s greatest advances as power loads continued to flirt with record highs. CAISO reported that forecast peak load Tuesday of 47,125 MW would ease only slightly Wednesday to 46,668 MW, not far from the 50,270 MW reached in July 2006 during a heat storm.

Gas at Malin only rose a penny to $2.68 and deliveries to the PG&E Citygate was flat at $3.14. Gas at the SoCal Citygate jumped another 33 cents to $4.15 and deliveries priced at the SoCal Border Average added 22 cents to $3.54. Gas on Kern Delivery vaulted 37 cents to $3.78.

CAISO did call for a Flex Alert, although it lists total installed generation capacity at 71,079 MW. A Flex Alert is an urgent call to cut back on electricity and shift demand to off-peak hours (typically after 9 p.m.). Fifty-four percent of the power on the CAISO grid is generated from natural gas.

Forecast temperatures across southern California and the desert Southwest continued well above normal with only a slight decrease. predicted Los Angeles’s Tuesday high of 90 would ease to 87 Wednesday and slide to 84 by Thursday, still 5 degrees above normal. Phoenix’s high Tuesday of 119 was seen holding Wednesday and dropping to 114 by Thursday. The normal high in Phoenix this time of year is 105.

The National Weather Service in Los Angeles reported “strong high pressure over the region will continue the above normal temperatures for the valleys, interior, and deserts this week. The night through morning low clouds and fog across some coastal areas will continue through the period. A weak upper trough will help with some cooling by the weekend.”

Next-day peak power prices in California soared. Intercontinental Exchange reported on-peak Wednesday power at NP-15 jumped $25.54 to $85.14/MWh and SP-15 saw its next-day peak power surge $21.51 to $79.29/MWh.

Other market centers had a hard time matching the California gains. Gas at the Algonquin Citygate rose 10 cents to $2.75 and gas on Dominion South fell 2 cents to $1.85. Deliveries to the Chicago Citygate were quoted flat at $2.77 and gas at the Henry Hub rose a penny to $2.87.

Elsewhere gas on El Paso Permian rose a nickel to $2.76 and gas priced at the NGPL Midcontinent Pool added 5 cents to $2.71. Gas at Opal shed 4 cents to $2.65.

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July futures opened a penny higher Tuesday morning at $2.90 as traders digested further deterioration in the weather outlook and mulled Thursday inventory figures.

Overnight weather models shifted moderately cooler overall. “[Tuesday’s] 6-10 day period forecast is warmer than yesterday’s forecast across the Interior West into the central US,” said WSI Corp. in its morning report to clients. “However, the East and immediate West Coast are cooler. As a result,” continental United States population-weighted cooling degree days (CDD) “are down 1.6 to 37.9, which are 7.6 below average.”

Forecast confidence is only average today. Medium range models are in reasonably good agreement and have shown some consistency with the large scale pattern during the past few days, the forecaster said.

Analysts are looking lower.

“[W]hile nearby futures could hold yesterday’s lows at about $2.88, we still see a high probability of a further decline to the $2.82 area even prior to Thursday’s weekly EIA report,” said Jim Ritterbusch of Ritterbusch and Associates. “While a contraction in the storage surplus versus five year averages of about 15-20 Bcf would appear likely, such a reduction has been virtually discounted and a supply build of less than 60 Bcf may be required to force much additional selling. The chart deterioration of recent sessions is keeping the money managers focused on adding to a newly acquired net short position and we believe that much room exists for a considerably larger net bearish holding.”

Ritterbusch added that the expectation of a lower CDD count “has forced enough chart deterioration to encourage the money managers further toward the short side. At the same time, expectations for a lift in production and a decline in power demand are keeping commercial concerns primarily involved in establishing short rather than long hedges, especially on price rallies. The late [last] week advance to above the $3 mark off of the supportive EIA stats appeared to foot the bill in this regard.

“From here, we see little chart support until about the $2.82 level where significant buying interest will likely be requiring assistance from Thursday’s storage release. Although the supply surplus will likely contract into the 215-220 Bcf zone, an implied injection of around 67 Bcf has likely been baked in. We are sidelined for now while anticipating a continued wide swinging trade with opportunities from both sides through the balance of this month and likely into next.”