Physical gas for Wednesday delivery was mostly lower Tuesday as benign eastern weather lent a soft touch to the market. A few Northeast points advanced as pipeline restrictions continued, but next-day power forecasts called for moderate increases in load, and next-day peak power rose slightly.

The greatest declines were seen in the East, and overall the physical market was 3 cents lower at $2.50.

Futures managed an advance as traders cited a sympathetic move with a strong finish to crude and expiring products futures contracts. At the close, August had advanced 2.7 cents to $2.832 and September was up 2.3 cents to $2.842. August crude oil gained $1.14 to $59.47/bbl.

Next-day gas in the Mid-Atlantic declined as forecast power loads fluctuated. The New York ISO said peak power load Tuesday of 22,795 MW would rise to 23,738 MW Wednesday but slip to 23,157 MW Thursday. PJM predicted that peak load Tuesday of 42,713 MW would reach 44,036 MW Wednesday before sliding to 43,139 MW Thursday.

Next-day gas on Tetco M-3 fell 6 cents to $1.20, and gas bound for New York City on Transco Zone 6 shed a nickel to $1.89.

Marcellus prices fell a dime or more. Gas on Millennium came in 2 cents lower at $1.08, and deliveries to Transco Leidy changed hands 4 cents lower at $1.05. Parcels on Tennessee Zone 4 Marcellus shed 13 cents to 95 cents, and Dominion South fell 11 cents to $1.07.

Gas on Iroquois was one of the few bright spots, with deliveries to Iroquois Waddington rising 6 cents to $2.81 and gas on Iroquois Zone 2 adding a stout 20 cents to $2.86.

Iroquois Gas Transmission on its website said, "nominations are at capacity and sealed from further increases for the...interconnect with Algonquin Gas Transmission.  Receipts through Secondary service are subject to allocation. Customers will be advised if further capacity becomes available during the day as volumes are nominated and confirmed."

A Michigan marketer said his company had completed its bidweek trades and hadn't bought any gas for Wednesday.

Genscape said, "This month has seen a large tranche of coal capacity retired from the power market, and the replacement gas burn increase resulting from that has come in almost exactly in line with [their] estimates headed into the summer season. Just over 8 GW of coal nameplate capacity was scheduled for retirement this month. Nearly the entirety of those are in PJM. Nomination data supplemented with Genscape's proprietary power market datasets have confirmed most of the scheduled retirements have in fact taken place."

Genscape added that in its summer outlook it had estimated "weather-normalized incremental gas burn to replace the June retirements would be 338 MMcf/d above last June. This was based on historic utilization rates of those to-be-retired plants and an assumed replacement heat rate on a combined-cycle gas plant of 7."

Market-wise coal plant replacements may have already made their market impact, and the market may just not have realized it. Rick Margolin, a senior analyst at Genscape told NGI, "we are seeing stronger year-over-year power demands even in the absence of extreme heat, but this was anticipated. It's not just coal plant retirements, and I wonder if people are getting duped by the idea of the retirements. There is a significant amount of nameplate capacity on the coal side that will be retired this summer, but you shouldn't read too much into that because those units that are slated for retirement have already been scaled back. They were being scaled back in 2014 and the summer of 2013.

"That said, because the replacements have already taken place, we see a structural shift upwards in gas burn per degree the last several summers. We extrapolated that and do expect to see some incremental burn per degree this summer. To us this is what is accounting for the higher power-burn numbers in the absence of extreme heat.

"I wonder if people have been expecting those coal retirements to have a much bigger impact on the market and this has been lending undue support to the market. I think the coal plant retirement card is getting overplayed," Margolin said.

"When you get three of those markets rallying [crude, heating oil, gasoline], that puts some upward momentum on natural gas. Most of the day we sat around doing nothing," said a New York floor trader.

Analysts see both bulls and bears becoming frustrated with a market that seems locked in a trading range. "This market could test the patience of both the bulls and the bears for a couple of sessions given near-neutral indications from the temperature factor and lack of significant impetus from the supply side of the equation," said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. "Although some warming in weather trends is anticipated next week along much of the eastern seaboard, this factor is being more than offset by cool trends across much of the nation's Midcontinent.

"As a result, some much above normal supply injections would appear likely across most of the July EIA [Energy Information Administration] releases. With the demand side of the equation offering limited impetus, supply side items will likely determine how the market finishes this week. To the extent that Thursday's reported injection is unlikely to stray far from normal builds, we won't expect much response as both buyers and sellers will be reluctant to take a sizable position into a holiday weekend that could bring some significant shifts to the temperature forecasts."

Ritterbusch is maintaining a bearish outlook and said, "we suggest holding any short August holdings. But we will caution against additional shorts until chart support at the 2.73 level is violated."

MDA Weather Services in its Tuesday morning six- to 10-day outlook said, " The forecast trends cooler in this period as ridging builds more strongly into the Gulf of Alaska. While this feature leaves most states west of the Rockies on the hot side of normal (including much aboves on average in the Pacific Northwest), downstream cooling results in a period with near and slightly below normal temperatures from the Midwest to the East. The coolest conditions are forecast in the second half of the period in the Midcontinent, although unsettled conditions in the eastern half presents some volatilities and risk to the day to day details."

MDA cautioned that "model volatility in this lead time as well as a Canadian air mass into the North Central U.S., which could yield cooler conditions at mid-period limits confidence in the details."