Moving in one-day delay lock-step with front month natural gas futures, cash market traders took their cue from the 18.8-cent drop in the May futures contract on Monday as almost every single cash point average recorded a decline on Tuesday.

After recording some of the largest gains on Monday, Rockies points once again led the market’s action — this time in a downward fashion. Rockies cash point averages mostly fell between 20 cents to 35 cents on the day. The price drops were a little more muted on the West Coast as the region continued to deal with the effects of an early season heat wave.

“It is definitely still hot here, but I don’t think most people are firing up their air conditioning [AC] units just yet,” a California trader said. “We really haven’t seen the jump in electrical load that normally corresponds with the AC push. No matter, the West is expected to get a heat reprieve as early as Wednesday.”

AccuWeather.com Meteorologist Eric Leister supported the trader’s account. He said Tuesday’s stifling heat with temperatures in the 80s and 90s across California was breaking late in the day as a weak onshore flow began to set up.

“This onshore flow will strengthen as we move into Wednesday and will bring an end to record heat of the past several days for Southern California,” Leister said. “For a comparison, the expected high [Tuesday] in Downtown Los Angeles is 93, with temperatures maxing out at 77 for Wednesday. Farther north, the heat will continue into Wednesday; however, a cold front will bring a fresh shot of cooler air to northern and central California on Thursday.”

In the Northeast, cash point averages were down mostly between a dime and 15 cents. The region, which has been under a damp spring chill, is expected to see a complete reversal late in the week. “Some real Jim-Dandy weather is shaping up for the Midwest and Northeast,” noted John Kocet, expert senior meteorologist for AccuWeather.com. “What will make it even better is how large the temperature reversal will be. In many locations, the temperature will be 25 degrees higher Friday than what will occur Wednesday. From Missouri to Maine, the warm flow will persist on Saturday with some 80s showing up all the way to New England.”

“There wasn’t a whole lot going on in the cash market on Tuesday. We are seeing typical shoulder season dynamics,” said a Northeast trader. “There is weak cash all around the Northeast as pretty much every point was lower Tuesday. Cash is definitely chasing futures because there is not a lot else going on. There is obviously no utility demand, which is normal for this time of year. There is tons of gas out there, very little demand and loose operating conditions on the pipelines. That is certainly a recipe for prices to be pretty soft.”

Cash softness might return again Wednesday if the market continues to chase near-month futures values. May futures closed out Tuesday’s regular session 2.9 cents lower at $3.511, which is very near what is expected to be key support price levels at $3.500 and around $3.460. According to some futures market experts, a meaningful breach of these prices would mean a departure from the recent trading range and could lead to even lower prices (see Daily GPI, April 20).

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