While some cash market regions Tuesday exhibited a healthy balance of both gains and declines, the Gulf Coast, Texas and the West Coast displayed mostly losses. Some noted that the recent bouts of mixed pricing going on are likely a result of producers and end users jockeying for position ahead of the summer heat and hurricane season, which is often a time of turbulent price swings.

Most Rockies points continued higher Tuesday with quotes at the Cheyenne Hub averaging almost 50 cents over Monday’s level of $3.65 to $4.14 on Tuesday. In the Midwest, Dawn continued to hold the high mark in the region with an average of $8.02, even after falling 4 cents on the day. Losses in the Gulf Coast region ranged from 2 to 11 cents, while California points shed anywhere from 6 cents at Malin to 15 cents at Southern Border, PG&E. Changes in the Northeast were mostly flat on the day.

With the traditional June 1 start of the Atlantic hurricane season lurking right around the corner, the energy industry Tuesday received even more price-supportive news as the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center said it is projecting a 75% chance that the 2007 Atlantic hurricane season will be above normal. WSI Corp. also joined the unanimous throng of forecasters in calling for an “active” season (see related story).

In addition to the bullish hurricane forecasts, recent temperature forecasts are calling for a warmer than normal summer for most regions of the United States. While the bulls still have those two chips in their back pocket for later redemption, neither the storms nor the heat have arrived yet.

“Until we see the whites of the hurricane’s eye or the arrival of some real heat, I think we’ll likely see prices stick around this area,” said a West Coast utility buyer. “Those are the two things that the market is focused on right now. While we are expected to get a little bit of heat over the next couple of days, it is staying pretty cool in the mornings, with temperatures in the 50-degree zone. I think there is definitely a little bit of price softness in the West, adjusting for what the Nymex did. Things were down from 5 to 15 cents at western cash points Tuesday morning while Nymex was relatively flat during that time.”

While Nymex trading was quiet in morning trade, the June futures contract turned that around later in the afternoon. After closing only 3.1 cents lower at $7.913 on Monday to start the week, a late barrage of selling Tuesday dropped the prompt month an additional 11.2 cents to close out Tuesday at $7.801. Whether the Nymex weakness transfers over to the cash market Wednesday remains to be seen.

“PG&E Citygate is trading at a little bit more of a discount to June and July futures and Socal Border is trading approximately 30 cents below PG&E Citygate,” said the buyer. “So the West Coast is looking pretty weak compared to what it has been doing earlier this month.”

He added that PG&E Citygate ($7.58 average Tuesday) is also trading kind of flat with the Henry Hub ($7.59). “While there were a couple of days that the citygate was trading well below the Henry Hub, for the most part it has been trading flat to maybe a nickel behind the hub,” he noted. “Off of that data, I would say PG&E Citygate prices are relatively strong or Henry Hub prices are relatively weak. Historically, the citygate has been trading at a larger discount to the hub.”

The utility buyer said the weakness is likely a result of the West’s current weather, which he termed the “sweet spot” of the season. “We are not getting too much cooling load or heating load, so people really are not using a lot of gas out here right now,” he said. “With no need to burn it, I think there is a lot of injection going on during this period.”

In the Midwest, one gas trader noted that Dawn in Chicago seems to be “relatively” strong. “Looking at the spread from AECO to Dawn and PG&E Citygate to Dawn reveals that Dawn has been trading pretty high. I think this goes back to fundamentals.” He noted that while current storage inventories are higher than the five-year average, the country is still short when compared to last year’s level, and the summer weather and hurricane seasons continue to inch closer.

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