Natural gas for delivery Wednesday was mixed in Tuesday's trading. A few points posted losses, but by and large gains of a few pennies were widespread. Overall, the market added 4 cents to $2.35, with broad gains in New England, the Gulf Coast, Midwest and California able to offset weakness in the Mid-Atlantic and Marcellus.

The expiration of the May futures contract was uneventful, with traders circumspect on the market's next move. At the close, May was higher by 2.7 cents to $2.517 and June had gained 2.3 cents to $2.537. June crude oil added 7 cents to $57.06/bbl.

Extreme spikes in New England natural gas prices seem unlikely if forecasts of demand by ISO New England, the operator of the region's bulk power system and wholesale electricity markets, are correct. The company said it is expected to have enough electric generation and demand-response resources available to serve forecasted peak demand this summer.

According to ISO figures, electricity demand is forecasted to peak at 26,710 megawatts (MW) under normal weather conditions of about 90 degrees Fahrenheit. Extreme summer weather, such as an extended heat wave of about 94 degrees, could push demand up to 29,060 MW, and these forecasts take into account the demand-reducing effect of 1,685 MW of energy-efficiency measures acquired through the Forward Capacity Market.

"The New England power grid is prepared to meet consumers' needs for power this summer," said Vamsi Chadalavada, COO of ISO New England Inc. "Prior to every peak demand season, ISO New England focuses on grid preparations to be ready to handle high amounts of electricity demand and a required reserve margin. This effort includes coordinating closely with the region's power plant owners, transmission companies, natural gas pipeline operators and neighboring grids in Canada and New York to ensure their resources are ready."

Next-day New England gas was quoted higher as on-peak power for Wednesday delivery at the ISO's Massachusetts Hub firmed. Intercontinental Exchange reported that on-peak power added $2.39 to $30.70/MWh.

Gas for Wednesday delivery to the Algonquin Citygates gained 33 cents to $3.16, and packages into Iroquois Waddington came in 8 cents higher at $2.83. Gas on Tennessee Zone 6 200 L gained 23 cents to $2.97.

Next-day gas in the Mid-Atlantic and Marcellus eased as little support was to be found from next-day peak power. Intercontinental Exchange reported on-peak power Wednesday at the PJM West terminal fell $3.14 to $34.97/MWh.

Gas bound for New York City on Transco Zone 6 fell 11 cents to $2.41, and deliveries on Tetco M-3 were flat at $1.72.

Packages on Millennium came in 17 cents lower at $1.22, and deliveries on Transco Leidy were quoted a dime lower at $1.37. Gas on Tennessee Zone 4 Marcellus changed hands at $1.02, down 27 cents. Dominion South was seen at $1.44, down 6 cents.

Futures traders were unimpressed with the expiration of the May contract. "The market closed up on the day a little bit, but it was nothing significant. The market needed to break above $2.54-2.55, and it didn't even do that," said a New York floor trader.

"I don't know if the close shows us anything. You'll see some cautious overnight buying if traders are trying to defend the technical gap formed Monday, but otherwise it could be a bear trap. At the moment the market seems to be just drifting."

In the near term, traders see the market in a defensive mode as weather forecasts well into May are calling for mild conditions with resulting hefty storage builds. The risk-reward landscape, however, may be changing.

"Most models are favoring unusually mild patterns that will begin later this week and likely stretch through the first one-third of May," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Monday to clients. "This will virtually assure some above-normal injections that will tend to limit upside price possibilities well into next month. Furthermore, the market is likely pricing in a supply build this Thursday of around 85 Bcf that is in line with our ideas.

"However, we now see upside price risk as exceeding that to the downside by a sizable margin, and we are beginning to probe the long side of the market for a long-term or investment-type trade. While [Monday's] May option expiration may have forced some price gravitation toward the $2.50 strike, we look for [Tuesday's] futures expiry to prove more telling. We will continue to cite a comparatively taut front May-June switch amidst multi-year lows as a bullish portent. In sum, we have suggested accepting profits out of short positions on today's drop to below $2.47 basis, and we will look to begin a cautious approach to the long side within the $2.40-2.50 zone in referencing June futures in anticipation of an eventual price advance to a $3 price handle by June as low prices force more displacement toward gas usage."

Others, while not advocating a longer-term bullish stance, are not convinced the market is headed lower either. "I'm surprised the market is this weak going into the summer," said a New York floor trader. "When trading is this slow, though, it's almost a non-existent event. It's the end of April and kind of a dead period anyway. I'll have to see what happens with the June and July contracts before I am convinced the market is going much lower."

Gas buyers across the PJM footprint won't be able to rely much on renewable power for the next day or so if weather forecasts prove correct. WSI Corp. in its Tuesday morning outlook said, "Weak high pressure will engulf the power pool during today and into a good portion of Wednesday as well. This may support partly sunny skies and seasonable temperatures with highs in the 60s to low 70s. An upper-level system and a better defined area of low pressure off the Southeast coast will combine to bring a chance of showers and rain across the power pool during Wednesday night, Thursday and Friday. Clouds, wet weather and a northeast breeze will support cool temperatures, with highs in the upper 50s and 60s. Partly cloudy and seasonably mild conditions may return by Saturday.

"Light wind generation is expected during the next day or so. A northerly breeze may lead to some improvement late Wednesday into early Thursday as output may climb over 2 GW. Relatively light and variable wind gen is expected during the end of the week into the start of the weekend."