Bullish prior-day screen teams with colder temps to keep upward pressure on market.

Fueled by Monday’s 15.5-cent gain in June futures and a cold snap impacting much of the country, cash point averages were up at a majority of locations across the country for the second consecutive day.

While most all points were up, gone were the 15- to 20-cent gains recorded on Monday for Tuesday delivery. Instead, gas for Wednesday delivery at most spots was only a nickel to a dime more expensive than on Tuesday.

A few points spread across the United States recorded declines, including Northwest Sumas and Stanfield, but no drop was by more than 6 cents.

“Markets are high,” said a West Coast trader. “On Monday we came in and everything was up. On Tuesday PG&E Citygate was playing the same game about 25 cents from the basis. We are really seeing some strength right now, which is nice. The landscape is very different from when we walked out on Friday.”

The trader said the two main culprits for the recent run higher in the cash market is futures and the weather. “In addition to strong futures, we’ve also got below-normal temperatures out here. We’ve seen a couple of days of 30-degree weather, so we’re seeing a lot of heavy trading going on trying to bring supply to the West Coast. Temps are supposed to warm up overnight and the 70s are expected for Wednesday, so we’ll probably see this recent run of strength falter.”

The Henry Hub for Wednesday delivery added another 7 cents to average $4.150, putting it at a premium to the screen. June natural gas on Tuesday closed at $4.131, down 3.9 cents from Monday’s regular session close (see related story).

Addison Armstrong, an analyst with Tradition Energy, said Tuesday that futures for the fourth time in the past six weeks “pushed back above the key $4 level amid signs of improving economic conditions and the approach of this summer’s cooling and hurricane seasons.” He said the gas market is attempting “to consolidate above $4.00 and hold its strong gains.”

However, Armstrong pointed out that the weather picture going forward might not be very supportive. “Weather forecasts, other than for the next five days in Texas and the Southeast, where above-average temperatures are expected to provide some cooling demands, continue to indicate normal- to below-normal temperatures throughout most of the eastern half of the country in the next couple of weeks,” he said. “This should help to strengthen resistance to rallies ahead of this week’s storage report.”

According to the Energy Information Administration’s (EIA) Short-Term Energy Outlook released Tuesday, the government agency expects the Henry Hub natural gas spot price to average $4.48/MMBtu this year (up 4 cents/MMBtu from last month’s forecast), a 53-cent/MMBtu increase over the 2009 average. In 2011 the EIA expects the Henry Hub spot price to average $5.34/MMBtu.

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