Monday’s mixed-but-mostly-lower cash market performance yielded to near-uniform softness Tuesday that nevertheless was generally mild. High comfort levels on storage, moderate weather in virtually all areas and the previous day’s dime drop on the screen constituted a classic trio of factors in falling prices.

Single-digit declines again dominated the numbers, although the highly temperature-sensitive Cheyenne Hub dropped by as nearly 20 cents. Flat quotes at a few Midcontinent and Rockies points betrayed the overall downturn.

Weather extremes are in extremely short supply right now. Very few areas (mostly near the Canadian border) are seeing daily lows of less than 40 degrees, and southern highs ranging to only the low 80s don’t have a lot of air conditioning getting fired up yet.

So far this trading week is playing out much as sources had expected late last week when fairly mild spring weather was establishing itself in nearly all regions for the first time this year: a gradual, slow slide in prices with little likelihood of any panic plunges or major rebounds. It also marks the advent of a very quiet market period that is likely to extend into the May bidweek, a couple of sources said.

A small rebound of 4.4 cents by the May screen was not believed sufficient to rally cash in the face of continuing fundamental weakness. A marketer noted that the gas contract “held in there at Nymex” while the oil products were down Tuesday. That may challenge thinking about how closely gas and oil prices are linked, he said. There have been times in the past month or two when gas was undeniably “following the oil” up or down, and other times when they moved in opposite directions.

An intrastate Texas trader detected one hint of relative cash firmness: during Tuesday’s cash trading session Katy was running about 8 cents under the screen, he said, while the gap had been as large as 16 cents Monday (keep in mind this compares early- to mid-morning relationships, and not where futures eventually settled in the afternoon). Last weekend was a good time to have bought gas for storage injections, the trader went on, but the advantage was gone Tuesday. He based his reasoning on current prices being a little higher than where he perceives them as shaping up for May, which would suggest waiting until next month to make storage purchases or at least until swing quotes have had a chance to fall further.

Several of the Texas utilities were selling gas Tuesday, which is a sure sign of a weak market, the trader said.

A Northeast marketer concurred, saying, “Cash is pretty soft again. So are [energy] futures, and weather-related demand looks like it will stay weak for a while.” Temperatures in the Northeast are now above seasonal norms, he added. The marketer thinks the balance of the month will be much like recent trading, which he called “very subdued.” He expects the Gulf Coast and Northeast to continue to see field/market spreads of 35-60 cents depending on the pipe.

Unless the weather gets a lot hotter quickly, it should be a quiet May bidweek with relatively low buying interest, one source commented.

The National Weather Service outlook for April 26-30 calls for below normal temperatures in South and West Texas, and in an area along the East Coast from the Massachusetts-Vermont border to the South Carolina-Georgia border and bulging out as far as mid-Kentucky. Above normal readings were predicted west and north of a curvy line running from the southeastern corner of Arizona through central Minnesota.

Calling it “a warning shot across the bow of what this summer will provide,” Weather 2000 observed in its Tuesday advisory that about two-thirds of all the states “incredibly” hit 80 degrees or warmer Monday, “punctuated by [90-degree] afternoon readings well up into New England!” The New York City-based consulting firm added that “strangely, there is still a way-off-base perception that a ‘warm summer’ might be like last year (2003)! This couldn’t be farther from the truth (either factually or subjectively).

“Perhaps these reminder stats will put this to rest before denial becomes dangerous: May 2003-July 2003 was the cumulatively coldest such period in at least 27 years for East hubs such as New York (36 years), Charlotte (27 years), Washington, D.C. (31 years), and Cincinnati (40 years)….and cumulatively the [second] coldest in at least 18 years for Detroit (18 years), Chicago (18 years), Pittsburgh (27 years) and Atlanta (26 years).

“…So, only shorts [and] tank-tops from here on out? Hold your horses. Remember, spring creates swings, even an abbreviated one like we’ll witness this year, and our forecast tables back this point up. Keep umbrellas and jackets handy, dust off the AC [air conditioner] if you haven’t already, and be prepared for a wild ride. The South and East have been drying out in a hurry. The West has already been a tinderbox for four years now. And the sun is only getting stronger and stronger each week.”

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