A weather forecast that had ignited bullish hopes late last week(see Daily GPI, Feb. 2) appeared to begetting heavily discounted Monday. The result was huge downturns inboth cash and futures prices. California led the way with dollar-plusdrops, and all other markets were falling between about 50 cents and adollar.

The AVN (aviation) weather model that called for a massiveSiberian cold front to approach North America this week did not getverification over the week, said a Texas-based marketer. The keybullish aspect of the AVN model through last Friday was that it hadprojected a period of sustained cold, the marketer continued; nowit is calling for several short spurts of cold separated by moremoderate weather. “That doesn’t create the peaking conditionsneeded for higher gas prices,” and the screen was reflecting thatin its plunge, he said.

Cash traders also were looking at milder six-to-10-day forecastsfrom the National Weather Service and following the screen lower.”Another day, another dollar down,” commented one trader. TheNortheast is expected to see above normal temperatures for quite awhile starting later this week, he said, so prospects for asubstantial price rally are slim to none. When you see Northeastcitygates trading about a dime or less above CNG in Appalachia,”that tells you the kind of bearish weather picture you’re lookingat,” the trader said.

He and other sources agreed that the magnitude of Monday’sdecline in gas futures, accompanied by large drops in the crude oiland heating oil futures contracts, make it likely that cash numberswill continue lower today.

The PG&E citygate had the day’s biggest decline of more than$2.50 in part because the troubled utility, which in recent weeksworried about having enough gas to fill its system in the future, hada different kind of problem — so much linepack that a Stage 3high-inventory OFO was in place Monday (seeTransportation Notes). However, the OFO was not carried over intotoday.

One marketer noted that he thought the January swing market wasquiet, “but things seemed to have gotten even quieter in February.”

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