The cash market was very much a mixed bag Monday, with largerebounds in the West arrayed against small price movements up anddown (but more down than up) in the East. However, because thegreat majority of the screen’s dazzling display of strengthoccurred following the close of cash business, sources found reasonto expect a bullish market in physical gas today even without muchweather-related support.

It was on the chilly side Monday in the Northeast and Midwest, acouple of traders reported, but not enough to create anysignificant heating load. However, both areas should be notablywarmer toward the end of this week, they said. Chicago temperatureswere about 12 degrees below normal Monday, one said, but areexpected to be normal for early summer in a few days.

Variable transportation costs weren’t working very well Mondayfor one trader in Transco’s Zone 6 (non-NYC) pool. Production-areapricing, such as Transco Station 65 in the high $4.10s, “were toohigh for me to ship gas to the market area and earn a decentprofit,” he said.

Western prices, especially in California, have been developing apattern around the weekends lately: high-linepack OFOs declared byCalifornia’s two major distributors help drive prices way down onFridays preceding the weekend, then major rebounds follow onOFO-less Mondays. There was no diversion from the script yesterday;just about all gains that reached double digits were in California,San Juan Basin and the Rockies.

This week’s outage of El Paso’s Blanco Plant certainly washaving an impact, according to one marketer. The associated supplyconstraint had San Juan prices rising more than a dime, closingtheir spread from Permian gas to a dime or less compared to a gapof 15-20 cents on Friday.

Cash in general continues to be strong without any weather tospeak of, another trader observed. With the Nymex backwardated tothe tune of about 9-11 cents (that is, the July contract is tradingat a discount to current cash) there is every incentive to pull gasfrom storage, yet there still seems to be a shortage of gas, hesaid. “Utilities are the only ones injecting right now because theyhave some sort of schedule. But what happens when we get to 100degrees across the U.S? At what price does gas need to be for theutilities to stop injecting so that gas can go to fill currentneeds such as power generation.”

Referring to the lofty heights that prices have reachedrecently, the trader continued, “We were probably just barely inbalance last year on supply and demand, and that balance has tiltedjust slightly. That is really all it takes.”

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