Forecasts indicating dwindling heating load in the Northeast and less cooling load in the western half of the South, abetted by the previous day’s drop of 23.6 cents by June futures, caused cash prices to sink at most points Tuesday. But although transport-constricted San Juan Basin numbers continued to fall, Rockies points recovered some of the major price ground they had yielded Monday.

Outside of the Rockies all locations recorded losses ranging from the low double-digits to as much as about 45 cents and were fairly consistent across the various market areas. The contrarian Rockies upticks ranged form a little more than 40 cents to nearly 70 cents.

The cash market will regain prior-day futures support Wednesday after Nymex’s June natural gas contract, moving largely in sync with crude oil, finished Tuesday with an advance of 12.1 cents.

A cold front will be moving through the Midwest Wednesday and subsequently bringing a bit of chill to the western end of the South. Although some Midwestern residents may feel the need to turn on their furnaces again, most will simply grin and bear the chillier temperatures, one source said. And the front’s primary effect when it arrives in more southerly climes will be to quash most air conditioning demand, meaning gas-fired generation units are unlikely to be dispatched.

A warming trend is under way in the Northeast, and temperatures there Wednesday are expected to be near or a bit above seasonal norms, The Weather Channel (TWC) said.

Mountain-area snows will be falling from the Pacific Northwest through the Rockies, according to TWC. Denver is expected to see its high around 47 Tuesday rise to the 60-degree area Wednesday, but the low will be in the lower 40s. Inland California highs are expected to match those in the desert Southwest from the low to mid 90s.

Prices established their softer lows fairly early and hung around in the same general area for most of the morning, a marketer said, but futures strength prodded the cash market to move higher in late deals. For that reason and because of the futures backing, he expects to see higher cash quotes Wednesday. He noted that the Midwest is getting cooler again, but said it wasn’t enough to create price-supporting amounts of heating load.

Acknowledging that just about all of the same pipeline constraints that devastated Rockies/San Juan pricing Monday are still in effect, a Rockies producer said snow was falling in Denver Tuesday, “and we don’t see that too often in the city during May. And a ski resort west of the city just got another five inches of snow, he said, so although regional temperatures might be edging higher, there was still a fair amount of heating load left, he concluded.

The producer reported learning from a breakfast conference speaker that current Rockies production is up 1 Bcf/d from year-ago levels. For the past six to seven years the region has been averaging steady annual production growth of about 500 MMcf/d, he said. Producers had thought REX-West, with its approximate 1.6 Bcf/d of takeaway capacity, would take care of three years of growth, the producer added. But the extensive pace of exploration activity leads him to expect that gains in the 1 Bcf/d area will continue.

Bottom line? Even with projects like REX expanding eastbound capacity out of the Rockies, it’s still entirely possible for “basis blowouts” like the ones that took prices as low as a penny on a few occasions last year, he said.

The National Weather Service (NWS) predicts below-normal temperatures for most of the eastern two-thirds of the U.S. during the May 19-23 workweek. Such conditions will occupy all of the Northeast, Mid-Atlantic and Midwest, and will dip as far south as lower Georgia and just shy of the Gulf Coast, NWS said. The below-normal area will stretch westward into northeast Texas and the Texas Panhandle at its southern edge and to western Montana and the Rocky Mountains in the north. A thin sliver of below-normal readings is also expected along the southern two-thirds of California’s coast. NWS forecasts above-normal temperatures in the southern third of the Florida peninsula and in a large chunk of the West from West Texas northwestward into central Oregon.

Tim Evans of Citi Futures Perspective looks for storage builds of 90 Bcf, 75 Bcf and 90 Bcf to be reported for the weeks ending May 9, May 16 and May 23, respectively.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.