Although this week’s overall weather picture is considerably milder than last week’s, the cash market was able to mix many flat to slightly higher points into general price declines Tuesday that ran as high as a little more than a dime.

The source of the modest show of firmness was a bit unclear, since it certainly couldn’t be linked to the previous day’s screen drop of 6.3 cents. However, there are signs of budding air conditioning load in the South, where highs in the 70s and 80s are forecast for Wednesday, and highs will be in the frigid 20s and 30s in the Rocky Mountains region, according to The Weather Channel.

Despite offering negative support to Tuesday’s cash numbers, April futures were expected to boost Wednesday’s swing prices for last-day-of-March flows after an expiration-day spike of 32.4 cents that left many cash traders scratching their heads and slowing down bidweek activity as they rethought their strategy.

Although the analytical explanations of the run-up centered mostly on technical short-covering due to Nymex traders’ inability to break below support in the low $6.90s, a Gulf Coast marketer joked that the screen spiked “because it could.” Seriously, he went on, no one seemed to be able to explain it satisfactorily. Bidweek trading was pretty slow after the spike as people had to digest the new development in April pricing, he said. However, he thought many traders, such as those at his company, had already finished most of their April business beforehand, so the soaring futures might not have much impact on indexes.

The marketer looks for a sell-off in remaining April deals Wednesday, but said cash quotes for the last day of the month “should be stout. Then again, who knows? It seems like traders are often applying logic to an illogical market.” He noted that Transco Station 65 continued to trade at an unusual discount to Henry Hub Tuesday, much as it has for about a week.

While the screen was slightly down Tuesday morning, Chicago citygate basis for April was flat to slightly negative, but after the run-up, basis was averaging more like minus 25-30 cents, another marketer said. The last April Chicago prices he saw traded Tuesday were on either side of $7.30, but he expects a first-of-month index in the low $7.00s. It was a “pretty routine and weak” swing market Tuesday, he said, but the sharp burst of screen support should result in a rebound Wednesday.

A Gulf Coast producer said April prices were weakening at first Tuesday morning, but were later pushed up by the futures gain. There was nothing fundamental about the screen spike, which was all technically driven, he said, adding, “Any little bit of news spins this market a lot.” He said index discounts were strengthening to “about flat” Tuesday at points such as Tennessee Zone 0. He reported doing a Tennessee 800 Leg sale at index minus half a cent last Thursday, but Tuesday the same point traded at index plus 0.25 cent. Tennessee’s 500 Leg traded as high as index plus 2 cents Tuesday, he said.

The National Weather Service (NWS) has another bearish outlook for gas prices in its six-to-10-day forecast for the April 4-8 workweek. It again sees above normal temperatures for most of the U.S. east of a line running southwestward from central Montana to Southern California. The only exclusion in that massive eastern expanse is in the Southeast, where NWS looks for normal readings south and east of a line through North Carolina and central Tennessee that then curves to the southwest through Mississippi into extreme southeastern Louisiana. The only area where the federal agency predicts below normal temperatures is a coastal slice of Washington and Oregon that extends part-way through Northern California.

Perhaps with his mind on the college basketball championship competition, Jay Levine of New Hampshire-based Advest Inc. offered this commentary on the screen spike: “There certainly wasn’t any tangible explanation for today’s moon-shot, but since when has that mattered? Here you have a shoulder period taking it to the hoop on termination day, catching many off guard, and in this game that’s reason enough. And if today is any indication, it also highlights what I’ve believed to be natgas’s resiliency and prospects for higher prices in light of what I feel are diminishing returns over in petro. Let me rephrase that. It will undoubtedly be difficult for natural to fend off lower (if not much lower) crude prices, but I’ve also suggested that natural is psychologically undervalued if not in the conventional sense — and movement like today will always be a threat, even if none of us believe it.”

Lehman Brothers analyst Thomas Driscoll is forecasting a storage withdrawal of 60 Bcf to be reported for the week ending March 25. His counterpart at Citigroup, Kyle Cooper, looks for a smaller draw of 46-56 Bcf. Cooper added that his analysis “indicates the current temperature-adjusted supply/demand balance is actually more bearish than last year by approximately 1 Bcf/d. Thus, if all other factors were identical, even more gas would be injected this year than last year. We do project much higher temperature-related demand and somewhat higher economic-related demand. However, we also project higher supply, and yet another record inventory level by the end of October/early November is quite possible.”

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