Transco Zone 6-New York City again skyrocketed by more than a dollar and further raised the peak price bar to $10 Tuesday, but the overall cash market rally had run out of gas, so to speak. Only Iroquois Zone 2 and Columbia-Appalachia managed to join NYC in higher numbers; the rest of the market ranged from flat to down about 20 cents. Most declines were around a dime or slightly less.

Asked about the new NYC spike, a Northeast trader commented, “Very expensively, that is how things in New York are going. A combination of everything is causing some impressive price run-ups. Generation load is high, there is an oil [power] plant down within the city, plus there is some fear of [financially ailing marketers] potentially stranding counterparties. That’s all on top of it being mighty hot.”

Although record electricity demand was anticipated Tuesday in the Big Apple, against a backdrop of near-record load in the rest of the Northeast (see story in Power Market Today), a mild cold front is due to bring a modicum of heat relief to the region Wednesday. That was reflected in large drops in next-day power prices in the PJM-West and Nepool (New England) trading pools, although both continued to see the most expensive “juice” of all by averaging $87-90/MWh.

Although prices at other Northeast citygates didn’t come close to keeping up with the Zone 6-NYC explosiveness, with generally flat performances they tended to fare more strongly than the rest of the market.

The overall market had little to influence it other that a minor break in northern market-area heat. Natural gas futures floundered close to either side of flat, although the crude oil and heating oil screens recorded major gains.

“Daily action was a little boring, with not much movement in the Midwest,” a producer commented. Chicago was flat to just one over [the screen during the morning], with a range of about $2.86-91. There was some good demand, but plenty of people ready to fill requests, keeping volatility down.

Florida Gas Transmission not only kept an Overage Alert Day notice for its market area in place Tuesday, but tightened the imbalance tolerance from 15% to 5%. A marketer reported seeing a Florida citygate range of $3.80-4.10.

Gulf Coast prices were falling off toward the end of trading, one source reported. Apparently transportation value to the market area got even stronger Tuesday “because field prices dropped, while Northeast citygates rose or were flat,” he added. The source saw some chance of a mild rally in first-of-August swing prices, pointing to the big gains by oil-related futures Tuesday. “Also, I think Transco Zone 6 for the first is getting bid pretty strongly,” he said.

Malin, which saw Tuesday’s biggest drop of about 30 cents, started in the low $2.50s and fell throughout the day, according to a marketer. “I jumped in and bought in the $2.30s but it kept on falling after I was finished.”

A Gulf Coast market said there was little change Tuesday in bidweek pricing from Monday’s levels. “Everybody seems to be trying to finish up bidweek deals more quickly than ever,” he went on, observing that the rush might have been helped along by more indexing.

However, another source perceived August business as “really slow Tuesday. Everyone was trying to get their deals done Monday morning before Nymex started up, so most of what I have seen is just traders finishing up.”

A Midwest marketer reported the Chicago citygate trading from the low to mid $2.80s to as high as $3.00- 05, with most business getting done in the low $2.90s (which is exactly where end-of-July swing prices were). MichCon tended to trade both a couple of cents higher and earlier than Chicago, he added, saying the bulk of Chicago business got done after the Nymex settlement.

An industrial buyer who indexed all of his August purchases noted that “lower prices are helping us end-users” and estimated that indexes would be about 35 cents down from July. But he added that the dwindling number of market players is getting more noticeable all the time, and said very wide bid-ask spreads were the primary feature of this bidweek.

A Gulf Coast marketer elaborated further on the ongoing liquidity crunch: “Two factors are causing there to be so few eligible buyers out there. First, there is a definite lack of trading partners that our credit department says we can do business with. Second, a lot of traders seem to be sitting on their hands, and are going to wait and see how things wrap up Wednesday. If I can’t find a few good partners, I may have to trade a lot in the daily market. Prices in August are going to trade like they did this month, where prices start off balanced and hang in there for a few days, but then they slowly come off, as we creep ever closer to [full] storage capacity.”

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