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Weather Bullishness Fades as All Points Drop

As Thursday's significant slowdown in price growth had indicated, last week's bull market in cash was on its last legs. That was borne out by declines across the board Friday.

Losses ranged from a little less than a nickel to about 30 cents.

After Thursday's lapse in next-day support for the cash market, Nymex traders sent strong guidance for Monday's trading in sending April futures 15.9 cents higher (see related story). A source said the realization that cold conditions in much of the East would continue through this week was responsible for the late uptick after the contract had been in the near-flat area for most of the morning.

Although chilly to cold conditions will persist through this week in the East, they are not expected to be as severe as the often snow-laden climate of last week.

Temperatures were expected to stay somewhat frigid into the weekend in the Midwest and Northeast, but expectations that this week's cold would be a bit more moderate helped dampen heating load in those regions. And the South, while getting cooler, was unlikely to turn on its furnaces again. And while subfreezing lows would persist in most of Canada, it was status quo for the western U.S.: generally cool to cold, with little in the way of very cold temperatures.

AccuWeather.com meteorologist Heather Buchman bore bad tidings for winter-weary folks from the Upper Midwest to the Great Lakes area, Ohio Valley and Northeast. After being teased with spring warmth in the previous week, they were getting thrown right back into winter last week, she said. "Now, many are wondering how long the cold is going to stick around."

The sad news is that "at the very least, it's going to stay cold in these areas through much of [this] week with highs largely remaining in the 30s or 40s," Buchman said. In addition to the cold, more snow is in the forecast through this week, she added. Parts of the Southeast are also expected to be colder than normal from the last week of March into early April "with a more significant cold shot arriving there toward the middle and end of [this] week."

One sign that Northeast conditions were beginning to ease was Tennessee's cancellation of an Imbalance in its two market-area zones (see Transportation Notes).

Not only did the Algonquin citygate slip by nearly 20 cents, according to IntercontinentalExchange (ICE), but its trading volumes on ICE fell by more than half from 254,900 MMBtu Thursday to merely 112,900 MMBtu Friday.

On the other hand, although Henry Hub fell about 14 cents, its ICE activity jumped from 640,900 MMBtu to 747,600 MMBtu.

Northern Natural Gas indicated that unseasonably cold temperatures would persist in its Upper Midwest market area through the week. A bulletin board posting projected that compared to the normal system weighted temperature of 37 at this time of year, Friday's average of 28 would change little to 24 Saturday, 26 Sunday and 30 Monday.

A Lower Midwest utility buyer said her area was still getting snow Friday, but it didn't stick. "We can see light at the end" of the winter tunnel, she said, adding that her company's heating demand was down about a third from the end of February.

The buyer reported having already finished April baseload purchases, paying basis of plus 0.25 to 0.5 cent at Northern Natural-demarc.

ICE said initial Chicago citygate deals for April on its platform were averaging $4.36 Friday, well above NGI's March index of $3.95.

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