Cash market prices gained an average 16 cents Monday as weather forecasts turned sharply colder at Midwest points. Gains were widespread with only one location in the loss column, and trading points around the Great Lakes sported rises of 30 cents or more. April was able to trade within 3 cents of the $4 mark and made a new 17 month high for a spot contract. It settled up 1.0 cents at $3.882. May advanced 0.5 cent to $3.914. April crude oil added 29 cents to $93.74/bbl.

Tom Skilling of the Chicago Weather Center said of the weather Tuesday, “Any flurries lingering in the morning depart early — then partly sunny, windy and unseasonably cold for the season. Highs near 30 degrees — nearly 20 degrees below normal.”

Other Midwest points were also expected to see temperatures drop during the early part of the week. AccuWeather.com predicted Monday’s high in Milwaukee, WI, of 36 would drop to 28 Tuesday before sliding further to 21 on Wednesday. The seasonal high in Milwaukee is 43. Detroit’s high of 38 on Monday was expected to fall to 34 Tuesday and 31 Wednesday. The normal high in Detroit this time of year is 46. The high in Cleveland Monday of 42 was anticipated to be 34 on Tuesday and 31 on Wednesday. The normal high in Cleveland is 47.

Next-day gas prices responded accordingly. Deliveries on Northern Natural Gas Ventura jumped 37 cents to $4.33, and gas on Alliance added 31 cents to $4.38. At the Chicago Citygates, Tuesday deliveries surged 31 cents to $4.38 also, and on Michcon next-day gas was seen at $4.26, up 14 cents. Consumers deliveries came in at $4.29, up 20 cents.

Prices at eastern points rose as well as a storm that originated in the Ohio Valley Sunday was expected to move east and slice through Pennsylvania, New York and New England, according to Anthony Sagliani, AccuWeather.com meteorologist. “This storm will slowly advance northward into the day on Monday, impacting cities such as Pittsburgh, State College, Scranton and Buffalo with the potential for heavy, wet and potentially tree-snapping snow. By the time Monday night and Tuesday roll around, crushing snow and high winds will invade much of New York state and New England. Well over a foot of windswept snow is in store for Vermont, New Hampshire and Maine.”

Quotes at the Algonquin Citygates jumped 83 cents to $8.66, and deliveries on Tennessee Zone 6 200 L added 79 cents to $8.67. Gas at Iroquois Waddington gained 9 cents to $5.93.

At eastern locations prices also firmed. Packages at Tetco M-3 were seen at $4.23, up 15 cents, and on Dominion next-day gas came in at $4.08, up 12 cents. Gas bound for New York City on Transco Zone 6 was higher by 20 cents to $4.29.

Next-day power prices also helped launch the higher gas quotes. IntercontinentalExchange reported that power for Tuesday delivery at the Northern Illinois Hub rose $11.00 to $41.00/MWh, and gas into the New England Power Pool’s Massachusetts Hub added $6.15 to $71.81/MWh. At PJM’s western hub, however, Tuesday power retreated $1.54 to $44.37/MWh.

Futures traders saw the market as somewhat stretched at current levels. The April contract made an early session high of $3.965, but from that point it began a retreat and barely finished in the win column for the day. “The market just doesn’t seem to have enough muscle to get it above $4. It may need some more weather or additional news to get it to the next level,” said a New York floor trader.

“Over $3.88 is not a bad settlement, so it is poised for another push to the upside. There are probably some [buy] stops over $4, which could help it from there, but I think it needs some news to prompt it higher. Once warm weather kicks in, I think that will be enough to get it to kick back down.”

Data shows that along with the recent string of rising prices, open interest has increased showing new buying interest in the market rather than short-covering by traders who had sold earlier in anticipation of prices falling. Reuters reported that futures-only open interest on Friday hit a record high of 1,316,945 contracts, easily eclipsing the previous high of 1,308,114 from April 2012.

Longer-term weather forecasts turned still cooler over the weekend. MDA Weather Services in its morning six- to 10-day outlook showed below- to much below-normal temperatures for all points east of Utah and Idaho. Southern California is forecast to be much above normal.

“As expected, this period includes plenty of cold, with widespread much-belows on tap across much of the central and eastern U.S. Compared to Friday, details mostly lean to the colder side, with the exception of California, which has warmed further. High-latitude blocking is largely responsible for the cold, and its persistence has held in good agreement among the major models. The blocking will also help to keep the storm track suppressed towards the Southeast, with plenty of cold-transporting surface high pressure found across the North. Confidence is moderate to high in the cold pattern overall.”

Analysts aren’t convinced that the recent price rise is indicative of any fundamental change in the market. “The natural gas market has rallied over 95% from last April’s lows. However, the supply-demand picture has not changed,” said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm. “We feel we are at the top side of this $3-4 trading range that has been established. On a trade basis, hedgers should look at locking in the summer strip for $3.90 or better.”

DeVooght suggests that trading accounts and end-users stand aside, and producers and those with exposure to lower prices should hold short a July October strip at $3.75. “Work to sell any summer months above $3.75-3.95 (light position).”

In a Monday morning note to clients, Addison Armstrong of Tradition Energy said, “Strong end-of-season weather fundamentals in conjunction with high levels of electric power sector demand due to nuclear power plant maintenance continues to drive gas prices in search of [a] top.”

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