Overall cash market weakness of about a nickel was led by Northeast marketers anxious to unload what may have been some overzealous purchases for July. Points on Transwestern were also lower as a compressor station was expected to return to service. At the close of futures trading August was unchanged at $2.824 after opening about a nickel lower and September softened .01 cent to $2.832. August crude oil fell $1.21 to $83.75/bbl.

Going into July eastern marketers may have been a little over-anxious and bought too heavily. Prices at Northeast points fell sharply as extra volumes made their way into the daily market. "People bought month out gas after what happened in June, and without the extra demand everyone is a little long," said an eastern marketer.

"Basis is a little tighter than it was last month," he said. "We'll have to see how the weather goes and there are some outages that end on June 9. Those outages tightened things up at the end of June and along with the hot weather it was the perfect storm for basis.

"People got a little bit more long than they did for June," he added.

Tuesday deliveries on Tennessee Zone 6 200 L fell just shy of a dollar, and next-day gas at the Algonquin Citygate fell close to 90 cents. Quotes on Iroquois Waddington were off by about 35 cents.

Other eastern points softened as well. Tetco M3 came in over a nickel lower and Transco Zone 6 New York quotes were off by about a dime.

Gas shippers in the Rockies now have a new index to price their gas. NGI has announced the CIG-DJ Basin index and it should help producers and end users keying off a number of active developments in northern Colorado and southeast Wyoming. "There are a lot of guys drilling the Niobrara up in Wattenberg. Anadarko is big up in there and so is Noble. Everybody is doing well in Wattenberg in the Niobrara. Noble says they are getting good wells north of the Wattenberg [Field] also." said a Rocky Mountain producer.

The July NGI CIG-DJ Basin bidweek index of $2.42 trailed the mainline CIG index by 3 cents, and NGI has announced several other new Indices for July. In the Northeast, NGI has begun listing separate Texas Eastern M2, 30 Receipts and Delivered price points. The inaugural Texas Eastern M2, 30 Receipts index, which largely reflects Marcellus production in Southwest Pennsylvania and West Virginia, came in at $2.75 for July bidweek. This is right in line with the respective $2.74 and $2.75 prices for Dominion and Columbia Gas Transmission. NGI's second new Marcellus driven index is the Millennium East Pool, which debuted at $2.70.

Also new to NGI's bidweek survey this month are Perryville, which can be found in the North Louisiana/Arkansas section of the price table. Perryville came in at $2.69, in line with the $2.69-$2.71 range for the other N. La/Arkansas pipes.

Next day prices on Transwestern plunged as the company announced it was returning a compressor to service. The company said it was returning the Station 4 compressor in Arizona to service after a cooling motor outage at one of the units.

Transwestern had declared a force majeure event for the gas compressor station, according to a posting on the pipeline's website. The notice said capacity for the Thoreau/West system will be reduced to 1.175 billion British thermal units a day from 1.225 billion. The system's capacity may return to 1.225 million Btu a day tomorrow, according to the company.

Deliveries to Transwestern San Juan fell nearly a dime and Transwestern WTX fell about a nickel.

Futures traders were not fazed by the lower open. "The longer the market stays up, the better chance we have of seeing $3.10 in the August contract," said a New York floor trader.

"Today [Monday] we traded sideways for most of the day, but tomorrow I think you will see it a little higher and we'll see $2.90.

The steady finish to the futures came as forecasters were calling for moderation in temperatures in the near term. WSI Corp. in its morning six- to 10-day outlook predicts a ridge of above-normal temperatures extending from Virginia and the Carolinas to Kansas. The Pacific Northwest is also expected to see higher temperatures.

"Anomalies between 3 and 8 degrees are expected to encompass most locations south and east of Chicago," the forecaster said. "The warmest anomalies are anticipated over the lower Midwest and the Ohio and Tennessee Valleys." Monday's forecast "is not as warm in the lower Midwest and the Ohio and Tennessee Valleys as it was [Sunday]. Temperatures may trend cooler in the Midwest, Ohio Valley and northeastern U.S. than currently forecast as the medium-range models all advertise a series of cold fronts will penetrate the northern tier of the country next week."

In spite of the near-term weather-driven weakness, analysts are taking a mildly bullish attitude. "The temperature influence is looking less bullish, according to most weekend updates, with above-normal temperature expectations toward mid-month generally being pushed west and away from the upper Midcontinent and East Coast region," said Jim Ritterbusch of Ritterbusch and Associates. "CDD [cooling degree day] calculations still favor some reduction in the supply surplus, especially against average levels. For instance, the current supply overhang of about 610 Bcf against five-year averages is apt to narrow by an additional 30-40 Bcf zone during the next couple of weeks, even allowing for some temperature moderation. With this expected surplus reduction in mind, we will repeat that our trading model attaches more importance to dynamic factors such as an ongoing reduction in the surplus rather than static factors that are already discounted such as the record high supply level of more than 3 Tcf.

"This still feels like a market that will go up easier than it declines with any headline surprises more apt to be bullish than bearish. [Power generation] demand is expected to remain strong, not only because of hot temperatures but also due to coal-to-gas substitution that helped to force a bottom into this market about two months ago. Across the month of June, we estimate that [power generation] demand may have increased by as much as 18-19% compared to a year ago."

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