With many areas turning quite mild for early January and some doubt surfacing about the severity of a predicted return of winter storms later this week, cash prices were flat to down about 35 cents Monday. The common range for most declines was between about a dime and a quarter.

Sources in locations as diverse as the Midwest and Calgary remarked on how fine their weather had become Monday and the potential for date-specific record high temperatures in the succeeding day or two. The Weather Channel’s web site reinforced that outlook with forecasts of record highs throughout most of the Plains region Tuesday.

Only the Northeast was expected to see seasonal readings, and not coincidentally that was the market (along with a few Rockies points) to record most of Monday’s close-to-flat price performances. A Northeast utility buyer said his area would stay cold for another day or so, get one day of relative warmth around Wednesday or Thursday, then revert to cold again. He noted that the screen’s plunge of about 41 cents had canceled out most of the previous Thursday’s spike, which had been based on that morning’s revised forecast of winter storms returning to much of the U.S. and Canada this week.

“The drop in market caught me off guard,” said a Gulf Coast trader. “And I am fairly sure I’m not alone. I don’t know anyone who saw this coming. Either prices rebound tomorrow [Tuesday], or they continue to go down. The fundamentals are strong in the near term, [but] cash came down because crude and the six- to 10-day forecast are moderating. Now they’re saying the arctic air that was going to just sit over the whole East Coast is going to be weaker [than expected] or may not come at all.”

A Canadian producer also considered it a toss-up about which way prices will turn now, especially since cash quotes were reported making late rallies in several areas. “Normally you’d expect cash Tuesday to somewhat reflect today’s screen dive, but it [market] might be interesting because cash was already weak relative to futures,” he said. Chicago citygates continued to trade around $4.80 while Nymex fell from $5.10 into the $4.90s, he observed.

In addition to natural gas futures taking a dive, the crude oil and heating oil contracts also saw big losses. A utility buyer attributed the oil weakness to OPEC newly affirming an announcement a week earlier about raising production by 1 million bbl/d.

A Florida utility buyer said the state’s temperatures had been fairly cold recently in early mornings but mild during the day. Because a couple of nights of near-freezing conditions were coming up, he thought Monday might have seen the first Overage Alert Day notice of the new year by Florida Gas Transmission, “but it wasn’t — knock on wood.”

Meanwhile, an LDC buyer in the Midwest reported selling gas, saying that area load must be obviously light if a utility is in selling mode.

A producer quoted intra-Alberta numbers falling nearly C40 cents to the low C$5.80s, adding that the weather around Calgary was “gorgeous” with daytime temperatures around 60 degrees F. According to a forecast he saw, the prediction of an arctic air mass for later this week was going to miss much of the West. The western end of the front, he said, “probably will go through Saskatchewan and Manitoba into the Midwest.”

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