The cash market followed up a week dominated by sharply falling prices with an across-the-board rally Monday. Gains ranged from about a nickel to 30 cents, with those between 10 and 25 cents most common.

Because of forecasts last week that mild weather would prevail in most regions through early this week, some traders were a bit surprised by the bounce. “It caught me off guard,” a Gulf Coast producer admitted. However, he thought Monday’s firmness might have been in partial reaction to prices having fallen so far and so fast in the last week or so, and that more utilities and end-users were emerging as “bargain hunters” now that current numbers often are several dollars below first-of-month indexes.

The producer added that people might be getting a little anxious again about the low-storage situation, “although I agree that such worries seemed to be shrinking while prices were going down.” Also, “the initial shock of warm weather may be involved” as traders see some air conditioning load already coming on in parts of the South so soon after a colder than normal winter, he said.

The Rockies had some weather justification for price increases as what The Weather Channel termed “a major league snowstorm” moved eastward Monday toward that region and the High Plains. Denver could get more than a foot of snow by Wednesday, and even greater depths were likely along Colorado’s Front Range, TWC said. A western trader said coming out of the weekend had brought industrial load back online. However, he noted that prices “started at their highs but then fell off throughout the morning as the reality of general market weakness set in.”

The Midwest was fairly mild Monday, a regional marketer said, but despite previous forecasts of continued mildness through midweek the region would be cooling down Tuesday by as much as 15-20 degrees from Monday’s levels. Chicago will be in the 40s Tuesday, he said. The marketer found it curious that “a pile” of summer term gas supply RFPs (request for proposals) were issued Monday “for some reason.” Virtually none were interested in fixed pricing, he said, but were based instead on Nymex triggers or related to storage in some way.

A Northeast utility buyer said his company had been almost totally inactive in the day market for the last couple of weeks, preferring to withdraw its daily requirements from storage. The second straight day of mild screen firmness Monday may have been a factor in the cash upticks, he said. He also noted that temperatures in the 30s were predicted for northern New England and upstate New York Tuesday.

Analyst Thomas Driscoll of Lehman Brothers estimates that this week’s storage report “will be a withdrawal of about 65 Bcf (60 Bcf more than our previous estimate of 5 Bcf due to colder than estimated weather) compared to 92 Bcf a year ago and a five-year average withdrawal of 87 Bbcf. We estimate that next week’s storage report will show a injection of 75 Bcf compared to a withdrawal of 75 Bcf a year ago and the five-year average withdrawal of 65 Bcf.”

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