Basing its strength largely on Monday’s 14-cent near-month futures gain, and to a lesser degree on the South adding some air conditioning load to that already existing in the scorching desert Southwest, the cash market recorded double-digit increases across the board Tuesday. Opinions were divided on whether the rally could be sustained Wednesday.

There was little significant geographic variation among increases that ranged from a little more than a dime to around 45 cents. Hot weather across most of the southern half of the U.S. cause Waha to see one of the day’s largest gains with supplies being tugged east into the intrastate Texas market, to the north into the Midcontinent/Midwest and to the west into the Southwest.

Tuesday’s bullishness allowed several points to trade flat with or slightly above first-of-month indexes. However, a solid majority of points were still at double-digit deficits to index, as all of them had been Monday.

The thermometer is rising more slowly in eastern sections of the South than it is toward the Texas end, but virtually all of the region is expected to fell highs of 80 degrees or more Wednesday. Meanwhile, summer-like heat has arrived to the west, with the Phoenix area forecast to record back-to-back highs around 100 Tuesday and Wednesday.

Weather-related gas load remains considerably scarcer elsewhere. A cold front will keep most of the Midwest cooled off Wednesday, although the region’s southern edge was likely to see highs in the 80s ahead of the front. A similar pattern will be in effect for the Northeast, with highs ranging from the 50s in New England to the 80s in Virginia, according to The Weather Channel.

A Midcontinent producer cited the strength of crude oil futures, which were back above $74/bbl Tuesday as Iran’s nuclear standoff and other global supply threats continue to concern trader, in saying prices “quite possibly” will be up again Wednesday. He expects the “rangebound” trading he has witnessed recently to continue.

Noting the premium of about 60 cents that Michigan citygates have over Chicago deliveries, the producer said he thinks it’s all the Alliance gas that has been added into the Chicago market in recent years that has reduced Chicago prices relative to Michigan citygates. Before Alliance’s start-up, he recalled, the Michigan premium had been more like a dime or so. He also noted that the main Midcontinent pipes that his company trades (Panhandle Eastern, ANR and NGPL-Midcontinent) had traded about $1.50 below Henry Hub during bidweek but had tightened the spread considerably to a little more than a dollar in the subsequent daily market.

A Northeast marketer was a little more emphatic than the producer’s “quite possibly” in asserting that he didn’t expect cash prices to be able to keep rising Wednesday, despite getting modest screen support again Tuesday. “There’s no real catalyst” among fundamental influences for further price moves upward, he argued. He acknowledged that air conditioning load is rising in the South, but pointed out that the northern market areas remain cool to mild with little prospect of change in the near future. Like the producer, the marketer looks for trading ranges to remain fairly tight. Basis spreads from the Gulf Coast to the Northeast were “just barely” wide enough to cover variable transport costs, he said.

The National Weather Service (NWS) forecast for the May 8-12 workweek calls for above normal temperatures in a swath from the eastern border of Alabama to the eastern half of New Mexico and extending northward into the Midcontinent and southwestern section of the Midwest. Deviations above the norm will be greatest in most of Texas, excluding the Panhandle and western end, NWS said. The agency predicts below normal temperatures in all of the Northeast except western Pennsylvania and the western tip of New York. It also expects below normal readings in the Pacific Northwest along with western Montana, the northern end of Utah, the northern half of Nevada and the northern two-thirds of California.

Ron Denhardt of Strategic Energy & Economic Research estimates a storage injection of 71 Bcf for the week ending April 28. Prices have finally begun to reflect the large storage surplus and are likely to decline further, he said. “We believe that forward market prices for September and October are currently well above likely cash prices. Cash prices during these months are more likely to be in the $5.00 to $6.50 range.”

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