Most cash market averages inched lower Tuesday with the exception of a handful of Northeast points, much of the Midcontinent and California locations, which posted gains.

Strength was noted at western points as curtailments and restrictions into southern California prompted higher prices, and warm temperatures in the East caused one market point to soar more than $1. The expired June futures contract suffered a double-digit drubbing as traders anticipated a seasonal decline. At the close of futures trading June had dropped 13.9 cents to $2.429 and July had skidded 14.2 cents to $2.485. July crude oil shed 10 cents to $90.76/bbl.

Restrictions and curtailments were posted by SoCal gas and quotes at delivery points into southern California jumped.

SoCal Border and El Paso S. Mainline added about a dime apiece, while Socal Citygate was higher by 13 cents.

Kern River Deliveries were seen 12 cents higher, but PG&E Citygate shed more than a nickel and Malin was quoted a penny lower.

Those restrictions can impact northern California as well. “It could keep gas in northern California and affect PG&E’s service area,” said a northern California trader.

The trader said temperatures would be rising over the next few days and their heating load would be dropping off significantly. “In the East Bay there can be AC load during the summer but not in San Francisco. Our service territory extends down to Bakersfield, and if you go across the Bay, temperatures will be 30 degrees warmer.” predicted the high in San Francisco Wednesday and Thursday would reach 68, one degree shy of its seasonal norm.

Above-normal temperatures prompted higher prices at Northeast locations. Algonquin Citygate added a nickel, and Iroquois Waddington rose a penny more. Gas into Tennessee Zone 6 200 L gained about a dime. The day’s top gainer was Tennessee Zone 4 Marcellus with a jump of $1.10.

Forecasters looked for temperatures in Boston, New York and Philadelphia to hold about 10 degrees above normal through Wednesday. predicted that the high in Boston Tuesday of 78 would rise to 81 on Wednesday before falling to 77 Thursday. The normal high this time of year is 70.

New York’s Tuesday high of 88 was expected to slide somewhat Wednesday to 85 and reach 77 on Thursday. The normal high in New York this time of year is 75. Philadelphia was expected to warm to 86 Wednesday, 9 degrees above normal.

Gulf points were lower. Henry was off by more than a nickel, and Tennessee 500 L dropped by nearly the same. ANR SE and Tetco E LA were both a few cents lower.

Futures fall below support at $2.50 casts the technical framework in a whole different light. “I think the more important number was $2.72. The market needed to clear that to have any hope for further upside,” said Walter Zimmermann, vice president at United-ICAP. “That’s where it hit a brick wall, and it looks to us that the spring peak is in.

“Now we are in average seasonal decline mode. Spring to summer it will break $1.90 if we have an average decline, but I think you first have to look at a 0.618 retracement of the spring rally from $1.902 to $2.759. That comes in at $2.23 and is a very realistic target.”

In spite of the day’s decline, top traders see the market as fundamentally unchanged. “The fundamentals of this market have not changed significantly, but the psychology has. Time will tell if we are just seeing an unwinding of short natural gas and long everything else trades and short-covering of outright short trades or if we have really seen a trend change and a fundamental shift in the market,” said Mike DeVooght, president of DEVO Capital, a Colorado-based trading and risk management firm.

“We suspect we are seeing a combination of the above influencing the market. We do, however, believe the long-term fundamental picture is improving and will continue to do so. However, on a trade basis we feel we are going to bottom slowly rather than up, up and away. Therefore, we will look for pullbacks to buy for speculation. For hedgers we still believe buying floors stacked in October is the way to protect yourself in this market.”

DeVooght recommends that both trading accounts and end-users stand aside. For producers and physical market longs with exposure to lower prices he suggests holding October $2.50 put options configured to cover the summer strip for 25 to 27 cents.

Near-term weather forecasts are moderately supportive. MDA EarthSat in its six- to 10-day outlook shows a broad pattern of above-normal temperatures centered over Oklahoma and Kansas and extending from New Mexico to South Carolina and South Texas to Wisconsin.

“Changes from Friday were mixed, with some of the Southeast coming in a bit warmer while the Northeast appears the same to slightly cooler. For the first time in a long while, it appears that the AO [Arctic Oscillation] and NAO [North American Oscillation] will be undergoing a strong negative surge in tandem, making it difficult to sustain a broad warm pattern. While this doesn’t automatically equate to cold either, it should limit the ‘aboves’ to the Southern half most of the time, with only brief surges northward. The Pacific Northwest will see the best chances for persistent ‘belows,’ though not of an intense variety,” the forecaster said in a morning report.

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