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Plains, East Strength Counter California, Rockies Softness; Futures Tumble

Spot gas prices for Tuesday delivery moved higher in Monday's trading as weather-induced strength in the Plains, along with strong performances at eastern, Northeast and Marcellus points, was able to offset broad weakness elsewhere. At the close of futures trading, May was down by 11.4 cents to $4.371 and June had fallen 11.5 cents to $4.404. May crude oil retreated 9 cents to $101.58/bbl.

Gas buyers working market areas in the Upper Midwest and Great Lakes were having to deal with another round of blizzard conditions that prompted double-digit gains at some points. According to AccuWeather.com meteorologist Kristina Pydynowski, "March is coming to an end with a disruptive blizzard that is shutting down travel across the northern Plains into Monday night. The blizzard will reach from western Nebraska to western and central South Dakota, much of North Dakota and northwestern Minnesota through Monday."

Although "true blizzard conditions" weren't expected across northeastern Minnesota and Central Ontario, "heavy snow and reduced visibility are still expected. Some rain and ice will precede the snow and blizzard in some communities. As temperatures plunge with the developing storm, blizzard conditions will soon follow. Howling winds will make measuring the snow very difficult. Winds during the height of the storm will gust to around 45 mph, leading to severe blowing and drifting snow and blinding conditions."

AccuWeather.com data indicated that the high Monday in Minneapolis of 58 degrees would drop to 37 Tuesday and reach 44 Wednesday. The normal high in Minneapolis this time of year is 49. Milwaukee's Monday high of 55 was forecast to drop to 49 Tuesday and fall to 38 on Wednesday; the normal high is 48. Omaha's high Monday of a spring-like 75 was predicted to drop to 47 Tuesday and 44 on Wednesday. The seasonal high is 58.

As of noon Monday, the North Dakota Department of Transportation had issued a no travel advisory for areas of northeastern, southwestern and north central North Dakota on reduced visibility from snow and blowing snow.

"In the wake of the blizzard, the northern Plains will need to be further monitored for more snow events during April," Pydynowski said. "The chance for a bit of snow will return Wednesday. If a storm tracks far enough to the north, steadier snow may follow for later in the week."

Northern Border Pipeline Ventura for Tuesday delivery jumped 28 cents to $4.81, and deliveries to Northern Natural Ventura were up a comparable 30 cents to $4.82. Gas at Demarcation gained 30 cents to $4.82, as well.

Deliveries to Consumers were up by 11 cents to $5.03, and gas at Michcon rose by 8 cents to $4.96.

In the Northeast, forecasts of warmth and mild temperatures were not enough to rein in strong next-day prices.

"Temperatures will average near to above normal through much of the coming weekend around Boston," said AccuWeather.com meteorologist Alex Sosnowski. "Come Tuesday, March will be but a memory, as will much of the chill and lingering wintry weather for the area. Highs most days this week will be within a few degrees of 50 F. The typical high for the city during early April is near 50 F."

The storm responsible for the chill and areas of rain, snow and thunderstorms to start the week was expected to continue to move away, with mild air from the southwest taking its place. As a front approaches from the west, a few showers were possible on Saturday, when there could also be a thunderstorm, Sosnowski said.

Next-day packages at the Algonquin Citygates rose $1.26 to $6.10, and gas at Iroquois Waddington climbed by 75 cents to $5.66. Deliveries to Tennessee Zone 6 200 L added $1.18 to $6.16.

Rockies prices softened as deliveries to a Williams facility in Washington state were curtailed following an explosion at a liquefied natural gas facility Monday (see related story). The fire and explosion damaged one of two storage tanks in Plymouth, on the Columbia River.

Williams spokeswoman Michele Swaner said the company was investigating the cause of the incident. She said the injured person had burns and was expected to recover. Swaner also said Williams shut the connections from Northwest Pipeline to the Plymouth facility, but noted that the mainline was still moving gas to customers. Northwest Pipeline is a 3,900-mile bidirectional transmission system crossing Washington, Oregon, Idaho, Wyoming, Utah and Colorado. It provides access to natural gas from British Columbia, Alberta, the Rockies, and the San Juan Basin in the Four Corners region.

Gas for delivery Tuesday on CIG fell 6 cents to $4.26, and deliveries to Northwest Pipeline Wyoming shed 3 cents to $4.34. Gas at Opal fell 3 cents to $4.40.

Futures traders were caught off guard by the day's drop. Traders noted that within an hour of the open, May was down 12 cents and "it almost looked like an error, but there was substantial volume," said United ICAP Vice President Drew Wozniak. "Cash, at the time, was around $4.45, but it [fell] to $4.375, and this just shows the swing into spring and the end of the heating season. That said, at last look, the EIA[Energy Information] storage market is minus 81 prox mid, and this should be more recognized more after this last day of bidweek.

"Even with last Thursday's lift, I am sticking with my projection that after the cash market loses its influence [Tuesday], we could see a gradual rise back above $4.50 within a few days."

Wozniak said there may be a substantial increase in production" since the 2003 less-than-1 Tcf season closing, but "it is still going to be an uphill climb to restore normal storage levels." Monday's "bearish move shows that there is still volatility out there. Bearish today, looking for a turn" Tuesday.

In its Monday morning six- to 10-day forecast WSI Corp. predicted a warming trend followed by a storm. The "forecast has trended warmer in the east early in the period but colder east and warmer west late. Forecast confidence is only about average thanks to the highly changeable, energetic pattern.

"Yet another in a never ending series of storms will impact the East during the middle of next week, and as usual, the track and intensity of the low will ultimately determine regional temps."

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