The market was able to squeeze out one more day of moderate overall price increases Tuesday, but between a sharp reversal in energy futures and warming weather trends, sources don’t expect that to continue Wednesday.

Once again most of the upticks were fairly small at around a dime or less. Also, some points were close to unchanged, and a few in the Rockies/Pacific Northwest saw minor declines.

A Midwestern marketer said that in addition to weakness in both the screen and weather fundamentals, Nymex’s natural gas contract was falling steadily throughout the day, which helped induce lower numbers in late cash deals. The trend in cash as trading proceeds is usually a good indicator of which way the market will move on the succeeding day, she noted. Generally there was “nothing exciting” in Tuesday’s activity, the marketer went on. It’s already starting to warm up around Chicago, she said, and although she’d heard of a spot in southern Nebraska that had eight inches of snow as recently as Sunday, it’s “probably all mushy slush by now.”

To a Northeast source, Tuesday’s trading “was very reminiscent of much of March.” The citygate markets didn’t see that much power generation demand, “but there was still relatively strong LDC buying” with regional temperatures remaining seasonal. But a warm-up is coming along and Nymex energy contracts were in full retreat Tuesday, “so I don’t expect rising prices to continue tomorrow.” The end-user market will be fading considerably by the weekend, he predicted. The source expects trading “to stay really brisk, but not as much as in early April. We’re getting into true shoulder month demand characteristics.”

The trading mood at Nymex Tuesday was in sharp contrast to the preceding day. Some analysts referred to a “no new news” day that allowed energy futures traders to kick back and indulge in some profit-taking ahead of Wednesday’s release of government data on petroleum product stocks and the Thursday morning gas storage report, which is expected to show a modest build in the teens [Bcf]. That would be considered bearish in comparison with a 46 Bcf pull a year earlier.

Highs in the 60s and 70s in the Rockies helped explain why the region was one of the weaker price performers. Also, Kern River said Tuesday high linepack had returned to its two downstream segments, while the two upstream segments continued to have normal linepack. And Westcoast continues to have an imbalance tolerance range of zero pack and 20% draft in place to encourage shippers to take more supply off the system.

After two days of unusually cool temperatures, thermometers in Texas started to climb Tuesday. Highs in the 70s Wednesday and Thursday in Houston were expected to yield to low 80s peaks Friday and Saturday.

In its forecast for the April 19-23 business week, the National Weather Service looks for above normal temperatures everywhere east and south of a line from Michigan’s Upper Peninsula through southeast Arizona. Only Washington and Oregon, along with a chunk of far Northern California and a thin coastal strip that extends through Southern California, are expected to see below normal readings.

According to Weather 2000 (which successfully predicted colder weather over the winter than most models and other forecasters foresaw), “The 2003-2004 winter’s last real hoorah is occurring this week, with the last dregs of very cool Canadian air being drawn down by storm systems trekking across the nation, and clouds and rain sharply suppressing temperatures across the South…This is not the 100% end of cool weather for the U.S. by any means. Canadian-border states will continue to see raw weather sweep through from time to time; it is not uncommon for Syracuse [NY] to see flurries in May. But more and more, positive temperature anomalies will be the norm, and in the not-too-distant future heat waves (and warm waves) will begin to be mentioned in these discussions.

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