“Why is May masquerading as January?” A source’s somewhat tongue-in-cheek rhetorical question succinctly described why nearly all of the market continued to soften substantially Monday and why a significant rally seems unlikely until the latter half of January — if then.

Unlike the overall rally that followed the New Year’s holiday weekend, flat to slightly higher numbers were fairly scarce as January 2006 began its second week. Instead, losses ranging from a little less than a nickel to a little over 90 cents were dominant. The West, where a PG&E OFO had not survived past Saturday, saw most of the modest displays of firmness, while the Gulf Coast and Northeast took most of the biggest price hits.

All points were trading solidly under $10 for the first time since early November, when Northeast prices registered big drops on the trade date of Monday, Nov. 7. Columbia Gas saw the top quote of $9.50 that day and regional citygates averaged well below $9.00.

Chances of a near-term rally are considered remote, although under similar conditions last week the cash market did achieve a couple of up days that were largely attributed to storage plays and, late in the week, to moderate increases in heating load. Not only is heating load going to be minimal in most areas this week, but Monday’s weakness throughout the energy futures complex, which included a 27.2-cent drop by the natural gas screen, will provide additional downward pressure on prices.

Outside of Canada and the northern tier of states, Tuesday’s temperatures are expected to remain at seasonal or higher levels in most areas, although some wet snow may visit the Ozark Mountains region, according to The Weather Channel.

Calling it “the January market that isn’t,” a Northeast trader said not a lot was going on. This is “probably the slowest possible market” in the second week of January when usually things are really popping on the cold weather front, he added. The Northeast is seeing temperature anomalies of 20 degrees or so above normal, with Boston and New York both getting highs in the 50s, he said, and it all added up to no heating load to speak of.

The trader thinks chances are good of another small storage injection being reported Thursday, saying he knows that his company and others were buying gas recently for injection purposes. It makes sense, he went on. If the market does get another blast of cold toward the end of the month, it will be nice to have withdrawal gas available that was bought earlier at cheaper prices, he said.

A Houston-based marketer also perceived a lackluster cash market. He reported someone in New York state telling him he was going to go home and mow the lawn, which is not something heard very often in a northern market area during January, the marketer observed. He said he was not seeing much storage injection demand Monday in the Midwest. He thought most people were content to roll their current volumes over, or maybe they didn’t have enough empty account space to make further injections worthwhile.

The marketer noted that prices had gotten plenty of cold weather support in the first three weeks of December, but very little since then. Some of the cheapest into-the-pipe gas around is in South Texas, he said, but there are still constraints on getting it to market on pipes such as Tennessee and Texas Eastern. Regarding the situation of offshore shut-ins, he said he thinks the main obstacle to further restoration of production for now is the continuing lack of processing capacity, which is most serious in southeast Louisiana.

The pace of recovering from hurricane-related Gulf of Mexico shut-ins remains glacial. Remaining outages had dropped by only 23.10 MMcf/d to 1,855.56 MMcf/d Monday from the previous Thursday’s tally, Minerals Management Service reported. Total deferred production since last Aug. 26 reached 581.682 Bcf, equivalent to 15.936% of normal Gulf output of about 3.65 Tcf, the agency said.

Citigroup analyst Kyle Cooper said his initial estimation of the storage report for the week ending Jan. 6 calls for a withdrawal “probably” in the lower 30s Bcf.

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