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Northeast Plunges Highlight Mostly Softer Market

Other than steep declines at Northeast citygates, last week's market ended quietly Friday with moderate dips in most cases, but with several points (mostly in the West and Midcontinent) registering as flat to as much as about 15 cents higher. Fairly moderate weather in many areas, heavy storage withdrawals and the weekend drop in industrial load were the dominant influences, but they were obviously offset at some points by localized heating demand and modest support from the previous day's screen.

Friday's price drops ranged from a couple of pennies to more than $1.50. Outside the Northeast, nothing fell more than 30 cents. Even the Northeast had its anomalies. Although most of the region's citygates took a dive of about 95 cents or more, Texas Eastern M-3 and Transco Zone 6 (non-New York City pool) were down only about a nickel and 20 cents respectively.

Storminess was to be the watchword of western weather over the weekend, with heavy snowfalls expected in the region's upper half. Snow accumulations would be measured in feet in the Sierra mountain range, according to The Weather Channel (TWC).

Meanwhile, weather was predicted to stay generally cold in the Midwest and Northeast, but with daytime highs getting above the freezing level in most sections. The South was scheduled to remain mostly spring-like, although snow is possible early this week in the mountains of North Carolina, TWC said.

A Northeast utility buyer said his company has stayed out of the daily market in recent days because it's trying to meet mandatory storage withdrawal requirements. However, he didn't foresee any problem in meeting the contract ratchets. "In February we figured we needed to speed up our pulls," he said, so the company backed off from any new purchases. He said getting some colder weather occasionally in recent weeks has helped increase storage pulls.

But that may be ending soon. The buyer said his area should be getting up to about 50 degrees by late this week, which would be significantly above normal for early March. He noted the cash market hadn't gotten much of a price signal from the screen in the last couple of days, when small daily gains were preceded by mild deviations both up and down from flat.

It was a very quiet market Friday, according to a West Coast source who reported finding that a couple of Houston-area traders had left early even though it wasn't a holiday weekend. Despite three successive small futures gains to end last week, he looks for the screen to resume going lower this week.

He said he is seeing more interest by industrial end-users in entering long-term supply contracts of six months or a year, but they were hesitant to pull the trigger on such deals. After watching prices soar last year and then tumbling so far this year, maybe the end-users want to wait another month or two in hopes that prices will fall some more, he mused.

Citigroup analyst Kyle Cooper's initial estimation for the storage report for the week ending March 3 is for a draw "probably near 120 bcf. However, this is subject to major revision after the surprisingly large draw last week."

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