The cash market followed up Friday’s robust increases across the board with modest declines at most points Monday. After defying light weather-based load for the most part in the previous week, prices appeared to be owning up to the fact that heating/cooling demand remains relatively scarce in most areas. The 12.2-cent drop by futures Friday was a further depressant to Monday’s cash numbers.

A few scattered points were flat to up nearly a dime. Otherwise losses ranged from a couple of pennies to about a quarter. Issues with excess supply caused most of the larger declines to occur in the West.

A general rally is expected Tuesday after natural gas futures and the rest of Nymex’s energy complex registered spikes Monday. The gas contract soared by 41.4 cents (see related story).

A few western pipelines reported problems with excess linepack. PG&E issued a high-inventory OFO and El Paso declared a Strained Operating Condition as a result (see Transportation Notes). Without issuing a constraint notice, Westcoast said it was experiencing high linepack Monday and expected the condition to get worse. NOVA notified shippers of the potential for an imbalance tolerance change “due to the current high linepack level.”

Despite PG&E’s OFO, quotes at Malin and the PG&E citygate dropped only about half as much as the downturn of about a dime at the Southern California border. But El Paso’s San Juan and Permian basin pools recorded Monday’s three biggest losses.

The Northeast is warming up from a slight bit of weekend chill, while the Midwest is due to experience cooler temperatures Tuesday. Neither region has substantive heating load, however, as their highs will be mostly in the 60s and 70s. The South is close to realizing a significant amount of power generation demand for air conditioning with peak mercury levels in the mid to high 80s but still isn’t hitting its normal summertime gas usage.

The 2009 Atlantic hurricane season officially began Monday with no storms in sight, according to the National Hurricane Center. Tropical Depression One, which formed last Thursday off the Mid-Atlantic coast, dissipated Saturday after not achieving named status.

A Gulf Coast producer reported “very slow business” Monday, saying he just did a few NGPL-TexOk deals “and not much else.” Chicago utility staffers were telling him about the gorgeous weather there causing low demand. He attributed the futures strength to the weakening U.S. dollar causing a shift of investment money into commodities, which he thought boosted both gas and crude oil.

Despite the overall softness, cash prices were rising in late deals based on the futures strength, the producer said, and that usually points to further increases the next day.

A Texas-based marketer agreed with both of the producer’s contentions that the weaker dollar resulted in more buying of commodities, which helped the gas futures spike, and that it was highly likely that cash prices will rebound Tuesday. There’s still not much weather load around, he said. With bidweek over and no hurricanes on the radar, the market has settled into a quiet mode for the time being, he said.

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