Cash prices overall rose more than a nickel on average Monday led by Northeast and Eastern points, but pricing points in the Midwest were almost entirely in the red — from a couple of pennies to more than a dime. At the close of trading January futures had fallen 9.1 cents to $3.46 and February also had dropped 9.1 cents to $3.487. January crude oil was down 37 cents to $85.56/bbl.

Next-day gas at Rockies points were mixed in spite of temperature forecasts showing below-normal temperatures.

“You’ve got to have cold weather in the Midwest. That’s the bottom line. Cold weather in Denver isn’t going to do it,” said a Rocky Mountain producer. If seasonally cold weather is unable to give much support to prices, the broader storage picture looks darker still. “I just looked at the NOAA [National Oceanic and Atmospheric Administration] eight- to 14-day forecast and it looks terrible. That’s the problem, the market usually looks out a week or two and do we have any cold weather coming in? If the NOAA is correct, the answer is no. Until we get some weather this [market] is going to have trouble.

“This is getting a little tense. It’s almost the middle of December, and we are still pretty balmy in the big markets. I watched the Green Bay/Detroit Lions football game and it was snowing and 33 [degrees]. That’s not all that bad, but it’s not arctic. We need an arctic blast,” the producer said.

Forecaster AccuWeather.com predicted the high in Chicago Monday of 36 would hold for Tuesday before rising to 40 on Wednesday. The normal high in Chicago this time of year is 37. In St. Louis Monday’s high of 34 was forecast to hit 43 Tuesday before jumping to 48 on Wednesday. The normal high in St. Louis is 44.

Quotes at Opal for Tuesday delivery added 3 cents to $3.40 and at the Cheyenne Hub next-day gas fell about 2 cents to $3.33. On CIG next-day gas came in at $3.29, up a penny and on Northwest Pipeline Wyoming Tuesday deliveries were higher by a penny as well at $3.37. Questar parcels rose 7 cents to $3.33 and gas at Malin fell about 8 cents to $3.45.

Spot prices in the East and Northeast rose as a cold front was expected to bring seasonal temperatures by Tuesday.

“Temperatures…climb to October-like levels over the mid-Atlantic and southern New England on Monday as a rainy cold front rolls across the Appalachians,” said AccuWeather.com meteorologist Jim Andrews. “Readings will rival record highs in reaching about 61 degrees in Boston, 63 degrees in New York, 67 degrees in Philadelphia and 69 degrees in Washington, DC. Behind the cold front, temperatures will tumble first along the Great Lakes and Ohio Valley. The leading edge of the cold will leap-frog the Appalachians in the wake of the front Sunday night and Monday, shaving about 15 degrees off big city high temperatures versus Sunday. By Wednesday, temperatures will end up within the normal range for the second week of December.”

At Algonquin Citygate next-day gas was quoted at an average $5.24, up 68 cents and at Tennessee Zone 6 200 L Tuesday deliveries surged 56 cents to $5.24. At Iroquois Waddington gas for Tuesday delivery added 38 cents to $4.77. Further south deliveries on Dominion were seen at an average $3.33, higher by 8 cents, and on Tetco M-3 next-day parcels changed hands at $3.64, up 14 cents. Gas deliveries to New York on Transco Zone 6 added 32 cents to $3.87.

Next-day power prices also gained. Peak power at the New England Power Pool’s Massachusetts Hub rose 82 cents to $47.30/MWh and real-time peak power at the PJM Western Hub gained $2.63 to $38.80/MWh.

Futures traders saw the day’s decline as portending further losses. “The way things are going right now there is no weather, temperatures are above normal and we are not seeing anything on the weather front for the next 10 days. We could be in store for the same weather we had last year,” said a New York floor trader. “It looks like we are going to press lower and give a test down to the $3.25-3.30 area and see where we go from there.”

Medium-term weather forecasts turned warmer. MDA Weather Services in its Monday six- to 10-day outlook showed above- to much-above-normal temperatures east of a sinuous line stretching from Minnesota to southeast New Mexico. Portions of Arizona and Nevada as well as southern California were expected to be below normal.

“The forecast has turned warmer across most areas since Friday as it appears that warm Pacific influences will continue to limit the progress of colder air trying to come southward out of the high latitudes. Most warmth will be found in the eastern half, while the most persistent cold will occur along the West Coast under the trough,” the forecaster said. “While the models all show a highly unsettled pattern, they differ greatly in the details, with little to no agreement on how exactly the storms will unfold. In the end, confidence is on the higher side in terms of the net warmer change, but much lower in regards to the details.”

Some are circumspect about the likelihood of still lower prices. “As many are, we continue to take a wait-and-see approach to the energy [complex], as well as most markets, until we see what comes out of the fiscal cliff negotiations. We will continue to hold current positions,” said DEVO Capital President Mike DeVooght. He currently advises trading accounts and end-users to stand aside, and producers and those with exposure to lower prices should hold on to a short winter strip established at $3.75-3.95. Any time the winter months trade above $3.75-3.95 he suggested continued selling for a “light position.”

One trader who is not waiting for the “fiscal cliff” is Tim Evans of Citi Futures Perspective. He continues to advise holding on to a short January futures position established on Nov. 26 with a protective stop at $3.83 to limit exposure on the trade. If the market breaks below $3.50, he would lower the buy stop to $3.76. His goal on the trade is $3.26.

Tom Saal, vice president at FC Stone INTL in Miami, in his work with Market Profile is looking for the market to test last week’s value area from $3.668-3.540. Typically, value areas are tested relatively soon, according to Market Profile methodology.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.