Cash point averages on Monday for Tuesday delivery roared back into the plus column with most spots tacking on 15 to 20 cents across the country, leaving many traders “scratching their heads.”

Traders were likely responding to Friday’s rebound in futures values. Despite digesting a bearish storage report Thursday, the June contract finished last week on an upbeat note, adding 8.6 cents to close above $4 at $4.015. For the week the front-month contract added 9.5 cents from the previous week. On Monday June futures added 15.5 cents to close the regular session at $4.170, potentially lending cash traders the support necessary to extend the price increases Tuesday. Talk among futures traders Monday was centered on whether this recent push higher represented a change in market sentiment or whether it just marked another selling opportunity (see related story).

Cash point upticks were fairly steady from the West to the Midcontinent to the Northeast on Monday. In the East, Algonquin Citygate added 22 cents to average $4.52 while Transco Zone 6 non-NY picked up 17 cents to $4.45. On the West Coast, SoCal Citygate added 22 cents to $3.97, and in the Midwest, Chicago Citygate tacked on 19 cents to $4.18.

The Henry Hub continued its recent game of cat and mouse with the screen. The cash point added 17 cents to average $4.08, but thanks to the futures surge Monday as well, remained at a discount to the June contract.

“A lot of folks are sitting around scratching their heads in this market,” a Midcontinent marketer told NGI. “From weekend gas to Tuesday is something like a 22-cent bump. Yes, there was a little bit of a cold front that moved into a number of regions, but it does not add up. It’s a little chilly for May, but I didn’t turn my heater on. In any sense it does not explain a 20-plus cent jump. We can’t figure out what is going on.”

From watching the cash market’s behavior over the last few months, the trader said he believes prices are in a “tail wagging the dog” type of scenario. “Futures go up and drag the market along with it. Then around Wednesday, values begin to drop in anticipation of a bearish storage report. Then when the report hits the bottom falls out, and cash follows. We’re like following the crowd. Ahead of the weekend I was trying to give my gas away at $3.69 and I couldn’t find a buyer. Then on Monday at $3.90 I’ve got people paying me too much money. The tail is truly wagging the dog, with the tail in this instance being Nymex.”

Despite the cooler temperatures the trader said demand remains low from what he can see. “There is no local demand right now,” he said. “The strength must be coming from storage needs, or someplace where the cold front was cold enough to spark some demand.”

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