Cash prices eased 4 cents overall Tuesday with pronounced weakness seen at Northeast points as well as the Midcontinent. Gulf points were mostly steady. At the close of uninspired futures trading, July had added 0.7 cent to $3.998 and August had managed to rise by 0.6 cent to $4.015. July crude oil slipped 14 cents to $93.31/bbl.

Traders noted that one of the lowest price market points was Tennessee Zone 4 Marcellus. At $3.58 and close to major energy markets, it seemed curiously underpriced relative to other nearby market locations.

“It’s cheaper for a couple of reasons. Stagecoach storage…is located in the middle of all that and has limited injections, so people who normally would be able to inject a little more aren’t able to do,” said a northeast marketer. “The outlet then is to take gas to Millennium if it can’t get to Tennessee, but there are issues with Tennessee going into Algonquin because of maintenance on Algonquin, so that is pushing things back a little bit at Mahwah, an interconnect with Tennessee. Some gas is going to try and find a home on Millennium, and Millennium’s ability to get into Algonquin is limited as well.

“The weather is 72 degrees as well,” he said.

According to Wunderground.com meteorologist Kari Kiefer “a cooling trend will continue for parts of the Eastern Seaboard as a cooler and drier air mass settles over the region. This air mass will lower temperatures to near/slightly below normal for this time of year.”

Wunderground forecast that the 73 Tuesday high in Boston would hold for Wednesday and fall to 70 on Thursday. The normal high for Boston this time of year is 72. New York City’s afternoon reading of 86 was expected to ease to 75 Wednesday before rising to 77 Thursday, one degree above normal. In Philadelphia, Tuesday’s afternoon 79 was predicted to ease to 75 on Wednesday and Thursday. The seasonal norm for Philadelphia is 74.

Quotes for Wednesday deliveries to Algonquin Citygates dropped 41 cents to $4.26, and gas into Iroquois Waddington fell 9 cents to $4.31. On Tennessee Zone 6 200 L, next day deliveries were seen at $4.15, down 18 cents.

Farther south, prices declined somewhat less. On Dominion, gas for Wednesday delivery fell 4 cents to $3.75, and on Tetco M-3 deliveries were down a penny at $4.01. Gas bound for New York City on Transco Zone 6 was seen at $4.01, 3 cents lower.

Gas for delivery on Tennessee Zone 4 Marcellus added 8 cents to $3.58, and quotes on Millennium were seen at $3.75, up 4 cents.

Gulf Coast points were steady to a couple of pennies lower, but Midcontinent locations were off by close to a nickel. Gas deliveries on Transco Zone 3 fell by 2 cents to $3.94, and packages at the Henry Hub were flat at $4.00. Quotes on ANR SE were seen at $3.89, down 3 cents, and gas for Wednesday delivery on Columbia Gulf Mainline was down 2 cents at $3.92.

NGPL Midcontinent Pool was quoted at $3.82, 5 cents lower, and deliveries to Northern Natural Gas Ventura fell 4 cents to $3.90. At Demarcation, Wednesday gas was seen at $3.89, 4 cents lower, and on Oklahoma Gas Transmission Wednesday packages were quoted 4 cents lower at $3.71.

Futures traders reported another light day. “The range was only $4.033 to $3.965 and there was not a lot of activity,” said a New York floor trader. “It’s entirely possible that people are positioning themselves ahead of Thursday’s storage report. We are expecting a little bit of a downdraft, and I don’t think the settlement [$3.998] looks too good to anybody. It spent most of the day above $4, but drifted lower late in the day and just stayed there.”

For the moment, the market seems able to hold, given unsupportive temperature forecasts, and “this market is consolidating mainly within the $3.95-4.05 zone as recent bearish updates to the temperature views appear to have been priced in for the time being,” said Jim Ritterbusch in a Tuesday morning note to clients. “But with unusually mild trends expected across the eastern half of the U.S. into the third week of June, some renewed price pressures to below our expected $3.95 support would appear likely by late session tomorrow, when the funds begin to position ahead of [the Energy Information Administration’s Thursday storage report]. We don’t anticipate much support off of the weekly storage data as an injection above the five year average of 92 Bcf would appear likely.

“Psychologically, the sizable narrowing in the deficit against last year will also be weighing, given the build of only 63 Bcf during the last week of May in 2012. So assuming no major shifts in the temperature views during the next couple of days, we will look for the storage report to begin weighing on the nearby futures even ahead of the report’s release on Thursday, as the past week’s momentum swing is now favoring additional entry into the short side by non-commercial participants.”

WSI Corp. in its six- to 10-day outlook said, “Temperatures are slightly warmer over the Midwest and Southeast when compared to the previous forecast. Temperatures could run colder than forecast over southern CAISO [California Independent System Operator] and the Southwest pending the development and mean progression of an upper-level cut off low pressure system. A warm risk is also in store over ERCOT [Electric Reliability Council of Texas] and portions of the interior West as a warm ridge builds overhead.”

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