Mixed price movement returned to the spot market Monday, with gains outweighing losses. Cooling load remained fairly strong across the South and Southwest but was spotty in more northerly market areas. The return of industrial demand from its usual weekend layoff supported cash prices, but the 16.2-cent drop by July futures on Friday provided negative guidance.

The majority increases ranged from a couple of pennies to about 75 cents and were largest in the West and Midcontinent. Other points were flat to down about a dime, with nearly all drops in single digits. The losses were confined to Midwest and Northeast citygates, Appalachia and some Louisiana and East Texas points in the Gulf Coast.

The problems with excess supply that so heavily depressed weekend prices in the West had disappeared. The high-linepack OFOs by California's two biggest distributors were lifted, Kern River said linepack had returned to normal systemwide and El Paso canceled its warning of a potential Pack SOC (Strained Operating Condition).

Tuesday's cash market will have to contend again with prior-day screen weakness after the July natural gas futures contract shed another 5.5 cents Monday.

Summer heat is staying somewhat subdued so far. Some locations in the South are peaking in the low 90s and the desert Southwest is returning to 100-degree-plus mercury levels. But most areas are peaking in the 70s and low to mid 80s, which doesn't prompt a lot of air conditioning use that would require use of gas-fired peaking generation to meet.

A Calgary-based producer joked that it has gotten warm enough in his area that he guessed it was safe to shuck his parka now. NOVA Inventory Transfer (NIT) started Monday down about C6 cents and bounced around a bit during the trading session with no real direction emerging, he said.

The producer sees a bearish problem in the making, as Western Canada storage is already about 80% full, he said. He expects that is going to keep widening the NIT basis spread from prompt-month futures as the injection alternative for placing spot gas becomes increasingly unavailable.

A trader who sells gas on behalf of several independent producers said she was too busy to talk. TGT maintenance that starts Tuesday in North Louisiana (see Transportation Notes) was cutting volumes at some points her company trades, and it was trying to re-place some packages Monday afternoon.

With pleasant weather ("about 84ish") cutting into local demand, a West Coast utility buyer said his company didn't need to buy any gas Monday and was able to avoid the sharp rebounds in western prices.

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