Next-day gas prices rose in Monday trading as strong pricing in the Midwest, Midcontinent, Appalachia, and Northeast outdistanced softer pricing in Texas, Louisiana, the Rockies, and California. The NGI National Spot Gas Average gained 3 cents to $2.94.

At first glance temperature forecasts seem benign, but the severity of the forecast system was enough to prompt buyers to lay in additional supplies. Futures slumped as traders anticipated no better than rangebound conditions and suggested a price “dump” might be necessary to set the stage for further advances. At the close, June had skidded 6.1 cents to $3.215 and July had fallen 6.0 cents to $3.293. June crude oil fell 49 cents to $48.84/bbl.

“Rangebound,” said Alan Harry, of Harry’s RE Trust in New York, when describing the market. “In the medium to long term we are very bullish natural gas, but short term I think we need another washout to the $3.05 to $3.10 level.

“There are a lot of people betting on long term bullish, but they got in too early. One thing that a number of people are counting on is that in these off-cycle periods we will have a rally up. Often in March, April, and May natural gas will have a rally up and then sell off in the summer months.

“I’m a buyer of dips. Just not today’s,” he said.

In the physical market, prices firmed as temperatures at major market centers were forecast to take a healthy dive. AccuWeather.com forecast that Chicago’s Monday high of 57 degrees would drop to 52 by Tuesday and climb back to 55 by Wednesday, 10 degrees below normal. Philadelphia’s 85 high of Monday was expected to fall to 73 by Tuesday and 65 by Wednesday, 5 degrees below normal. New York City’s 74 max Monday was forecast to fall to 72 Tuesday and 63 on Wednesday, 4 degrees below normal.

Gas at the Algonquin Citygate rose 20 cents to $2.97 and deliveries to Iroquois, Waddington fell 3 cents to $3.21. Gas on Tennessee Zone 6 200 L came in 6 cents higher at $2.94.

Gas on Dominion South rose 7 cents to $2.70 and gas at Chicago Citygate gained 7 cents to $2.99. At the Henry Hub next-day gas was quoted at $3.17, flat, and packages on Panhandle Eastern changed hands 3 cents higher at $2.75. Gas at Opal shed 2 cents to $2.75 and gas priced at the PG&E Citygate slid 3 cents to $3.33.

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Near term weather is a challenge in the East. “A cold front that helped spawn killer tornadoes and flooding rain during the weekend is coming into the East with slightly less severity,” said Elliot Abrams, AccuWeather.com meteorologist.

“By Wednesday evening, the storm from today will move to the northeast of Maine; it is sending cool, dry air across New England. Meanwhile, we see a new storm developing in the lower Mississippi Valley and causing heavy showers and thunderstorms. By Friday evening, the storm will evolve into a major system affecting all of the Northeast. It will then slowly move into eastern Canada. A northwesterly flow of very cool air will take over in the wake of the storm, and we still see that cool flow in the map for two evenings later.”

Futures opened 3 cents higher Monday morning at $3.31 as traders digested significantly cooler temperatures predicted for Northeast and Midwest energy markets.

In its morning six- to 10-day outlook MDA Weather Services said, “The forecast sees modest change in the cooler direction across the Eastern Half when compared to both Friday and Sunday’s reports. This comes as a result of a stronger ridge over the northern Atlantic, a feature which blocks the progression of a trough out of the East. As a result, below-normal temperatures are favored from the Great Lakes points east, including a few days with much below normal readings within this region.

“Belows are also seen in the Southwest from mid to late period, while aboves are limited in the period composite to the Rockies. Confidence remains at just moderate levels.”

Risk managers see the next market driver as the arrival of cooling season demand, but nonetheless see the market overextended at current levels.

“The gas market continues to trade in a choppy two-sided range as market participants bide their time awaiting the cooling season demand,” said Mike DeVooght, president of DEVO Capital Management. “The weekly gas storage numbers came in slightly higher than anticipated.

“On a trading basis, we still continue to look for the market to run out of steam at current levels. We think there is a good chance that we could test the lows of late February [$2.52] in the next few months. We will hold current short positions for producers and will look at rallies to the $3.40-3.50 range for the balance of the year as a selling opportunity.”

Market technicians see little change in the rangebound nature of trading. “No change,” said Brian LaRose, a market analyst with United ICAP. “To confirm the seasonal uptrend is intact and another round of higher highs is on tap, bulls must push natgas through both $3.347-3.358 and $3.422-3.432. Succeed and we can begin targeting higher prices. On the other hand, if the bears can prevent natgas from making new highs, we will need to entertain a season top. For now we are forced to wait for more info.”