Cash prices were about 12 cents lower on average Tuesday as next-day power prices across the East slumped and the weather outlook called for temperatures to rise to seasonal norms.

The Great Lakes, Midwest, East and Northeast were all weak. Following Monday’s weak performance, traders were expecting a soft landing by expiring April futures, but prices recovered and at the close April settled at $3.976, up 11.1 cents and May had added 10.3 cents to $3.991. May crude oil rose $1.53 to $96.34/bbl.

In spite of the lower physical prices, marketers said they weren’t all that interested. “We aren’t buying all that much gas since it is close to the end of the month and we have topped customers off or taken from storage,” said a Michigan marketer.

The marketer was somewhat reluctant to commit to large index-priced volumes for April since the 22-cent basis the company would pay would put its April gas cost at slightly less than a lofty $4.20. “We have had several packages [offered] ranging from 20 to 23 cents over. We are paying this for our index gas, but with warmer weather, prices could come off. It seems like not next week but the following week we will get more normal temperatures. It’s hard to go in at these high prices,” he said.

If the outlook for April comes to fruition, buying at index might not be such a bad call. “While April will not be as cold as March, thanks to the strengthening sun, pockets of cold air will continue their invasion from the northern Plains to the Midwest and Northeast into the first half of the month,” said Alex Sosnowski, a meteorologist with AccuWeather.com.

Sosnowski is looking for “the overall weather pattern into the first part of April [to] continue to run about a month or so behind schedule. March behaved a lot like a typical February, and it appears the first half of April will be what March should have been like. The current batch of cold air will reach its peak during the middle of this week but will back off briefly over part of the Easter Weekend, ahead of another push of cold air from the Midwest to the Northeast.”

Blocking is expected to remain in place thus providing a mechanism to bring cold Canadian air southward. “The jet stream appears as though it will continue its antics of large southward dips, known as troughs, and northward bulges, known as ridges,” AccuWeather.com meteorologist Brett Anderson said. “Occasionally, these dips will break off from the main jet stream forming closed-off lows. The March lion is not in a hurry to leave. It appears it is April that will be in like a lion and out like a lamb.”

High temperatures are expected to gravitate to seasonal norms as the week wears on. Chicago’s Tuesday high of 42 is forecast to reach 44 on Wednesday and 47 on Thursday, 3 degrees off a normal seasonal high.

Quotes on Alliance fell 14 cents to $4.19, and at Northern Natural Ventura gas for delivery Wednesday fell about 19 cents to $4.10. At the Chicago Citygates, next day deliveries fell 14 cents to $4.19, and on Consumers packages for Wednesday shed 11 cents to $4.19. On Michcon, gas was at $4.18, down 10 cents, and at Dawn buyers were able to pay 11 cents less at $4.27.

Sliding next-day power prices helped push eastern and Northeast quotes lower. IntercontinentalExchange reported next-day peak power at the New York Independent System Operator’s Zone G delivery point fell $2.42 to $53.58/MWh and at the New England Power Pool’s Massachusetts Hub next-day peak power fell $7.15 to $49.90/MWh. At the PJM West terminal next-day real-time peak power settled at $43.99, down $7.90/MWh.

Gas deliveries Wednesday to Algonquin Citygates fell $1.27 to $5.44, and at Tennessee Zone 6 200 L packages were seen for Wednesday at $5.69, off 90 cents, and at Iroquois Waddington next-day deliveries came in about 13 cents lower at $5.23.

Gas on Dominion shed 9 cents to $4.00, and at Tetco M-3 Wednesday deliveries were seen at $4.24, off 12 cents, and gas headed for New York City on Transco Zone 6 fell about 12 cents to $4.29.

Futures traders see $4 gas as almost inevitable. “I’m thinking we’ll see $4, but all the back months are above $4 with the exception of the May, so it’s not that tough a deal to maintain prices over $4 since we are so close,” said a New York floor trader.

Longer-term temperature forecasts were mixed. “Temperatures are slightly cooler over the Northwest and north-central U.S., whereas temperatures are a touch warmer over the Southwest and Gulf States,” said forecaster WSI Corp. “Temperatures could run colder than forecast across much of the Northeast following the passage of a low-pressure system later in the period.”

The pervasive cold throughout most major energy markets is expected to keep a firm tone to the market. “[E]arly expectations for a well above-average storage withdrawal and the cold weather in the coming week [should] provide support for the market,” said Addison Armstrong of Tradition Energy in Tuesday morning comments to clients. Although expiring April futures failed to make a convincing advance over $4…expectations of what might be three more storage withdrawals and the remaining weeks of cold weather should provide support for the market until temperatures shift warmer next month, he said.

Others see another assault on $4 as a distinct possibility. “While [Monday’s] late-session sell-off provided a cautionary note to the bulls given some minor technical damage and inability to push above the pivotal $4 mark, we are still viewing the possibility of fresh highs as strong,” said Jim Ritterbusch of Ritterbusch and Associates in a Tuesday morning note to clients. “Updates to the temperature views still appear bullish from our perspective, despite the fact that some warming will be developing in absolute terms as spring progresses. Both the six-10 and eight-14 day views are still generally advising below-normal trends across key consuming regions within the eastern half of the U.S. A continuation of these forecasts will limit price sell-offs as were seen yesterday, especially if a cold outlook is sustained into the upcoming weekend.”

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