The cash market was remarkably consistent in trying to match up with the screen’s decline of just less than a dime Tuesday. Most points also recorded drops in the vicinity of a dime, although a few fell by only about a nickel while several others in the West were down by as much as a quarter.

A lack of weather-driven demand combined with weak energy futures to ensure cash losses across the board. Although natural gas futures were only marginally lower during the morning, traders in the crude oil and heating oil pits were creating huge plunges of more than $1/bbl and 2 cents/gallon, respectively. There were reports that Venezuela plans to increase oil exports, which would only add to the export boosts announced recently by Russia.

Although winter storm warnings were in effect for parts of the Rocky and Sierra Nevada Mountains, and a Calgary trader said there was a possibility of snow in the local forecast for Tuesday night, those were far from enough to bolster western prices, especially considering the abundance of supply having trouble finding a home. Far more key were warming trends proceeding rapidly in the Midwest and Northeast, while the Southeast was returning more slowly to mildly warm conditions that had little impact on air conditioning load.

A trader in Florida quoted a delivered package around $3.80, a far cry from the $7-plus citygate pricing of a couple of weeks ago and barely a dime above several Northeast citygates Tuesday. “It’s cooled off quite a bit, and there’s actually capacity available now on FGT,” the buyer said. “That’s quite a change from the last few weeks.”

A Northeast utility buyer said his region should be feeling temperatures in the 70s by Thursday, “which means virtually no heating or cooling load for gas.” He expects prices to keep softening at least through the Memorial Day weekend. After that, “everybody will be watching for the first hot weather to generate a rally, but forecasts I’ve seen indicate that June will be cooler than usual.”

A Gulf Coast marketer saw a chance that enough heat could return in time for a pre-holiday rally, “but I don’t know. Those were pretty big hits getting taken by oil and gas futures today [Tuesday].”

After announcing earlier that linepack was high and that deliveries to downstream Columbia Gas at Leach, KY, might be allocated (see Transportation Notes), Columbia Gulf said late Tuesday that Leach nominations had exceeded available capacity. As a result, secondary nominations were reduced to zero and primary nominations were reduced based on contract Maximum Daily Quantity.

A Midcontinent/Midwest trader offered his assessment of the current market: “We’ve been saying for a long time that gas was overvalued and may be seeing that recognized now. Open interest volume has had a lot to do with sustaining futures, and I think that’s fading. We blew through the 40-day average today — $3.25 [for June futures] seems to be the number everybody is talking about.

“Long term, I have to be bullish because of recent low drilling levels, and I also think there’s some demand that isn’t obvious to the overall market for now. That’s largely because electric output from coal plants has been declining recently, but weather is too mild for that to show up yet. But gas demand is weak for the next few days. Chicago is undergoing a fairly fast warmup. Some people there say it could approach 80 degrees Wednesday; I don’t think they’ll get there, but I know they were buying less [Tuesday] than on Monday.”

A utility buyer reflected consensus about the upcoming bidweek: “We might do just a little bit of June trading, either index or basis, on Friday, but I agree that most people will wait until after Memorial Day to get going. Next Tuesday and Wednesday should be the busiest trading days.” June prices continue to look stronger than current swing numbers, the buyer and others concurred.

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