Cash prices overall fell an average 15 cents Friday, but if the weather and constraint driven mega-downmoves by eastern and northeast points are included, the average overall decline would have been $1.83. Weather forecasts called for a warming trend by Monday and constraints on a major pipeline were lifted.

Gas into New York City took the biggest hit falling by more than $25/MMBtu. The decline was widespread and only a handful of points escaped the selling. At the close of trading February futures eased 0.2 cent to $3.444 and March eased 0.9 cent to $3.463. March crude oil dropped 7 cents to $95.88/bbl.

East and Northeast points for weekend and Monday gas fell precipitously as traders had no desire to get caught on the wrong side of a weather trend. Forecasts called for continued cool, but increasing temperatures over the weekend with a pronounced rise on Monday.

AccuWeather.com predicted Boston’s Friday high of 24 would rise to 26 on Saturday, 28 on Sunday, and reach 37 on Monday. The normal high in Boston is 36. New York City’s high temperature Friday of 23 was anticipated to reach 28 on Saturday and 30 on Sunday. Monday’s high was predicted to reach 35, 3 degrees below normal. Chicago’s warming trend was expected to be warmer yet. The high on Friday was forecast to reach 28, and Saturday was expected to be just 26 and Sunday 30. By Monday, however, the high in the Windy City was expected to jump to 43, well ahead of the seasonal high of 31.

The National Weather Service in New York City said “high pressure builds across the area on Sunday and through the beginning of the work week. The recent chilly polar temperatures will end as a warm front lifts northward Monday into Tuesday…supporting milder conditions with temperatures 10 to 15 degrees above normal.”

Transcontinental Pipeline ended the operational flow order that had been in effect Wednesday and Thursday. “Circumstances leading to the issuance of the OFO have improved, however Transco strongly encourages all parties to manage their system requirements to ensure a concurrent balance of receipts and deliveries,” the company said on its website.

With temperatures expected to ease and pipe flows expected to loosen, gas for delivery for the weekend and Monday to the Algonquin Citygates tumbled $19.68 to $14.91 and deliveries to Iroquois Waddington shed $17.19 to $11.35. Customers on Tennessee Zone 6 200 L saw prices drop $17.24 to $14.91.

Deliveries to New York City on Transco Zone 6 spiraled lower by $26.61 to $10.46 and deliveries on Tetco M-3 shed $7.68 to $4.84. On Dominion weekend and Monday gas fell 18 cents to $3.39.

Producers in the Midcontinent reported difficulties moving gas. “I don’t know what the deal is, but in this part of the world there’s not much weather and nobody wants to buy gas. The cold is in Chicago,” lamented an Oklahoma producer.

“What is happening is we are so constrained. The Enogex pipeline is constrained and is trading 6 cents under the daily index. The main issue is pipeline capacity and not price. The pipeline was not designed to carry so much gas to the interstate [pipeline].

“It’s a disconnect and the real weather is in Chicago, but we can’t ship our gas to Chicago. We can’t get it out of the system so we have to discount the gas. At the end of the day’s trading it was trading at $3.25 to $3.26. There is a lot of storage gas that has to find a home by the end of March,” he said.

Gas on ANR SW dropped 19 cents to $3.33 and deliveries on NGPL Midcontinent Pool fell 20 cents to $3.30. On Oklahoma Gas Transmission gas declined 15 cents to $3.27 and on the Centerpoint West system weekend and Monday gas fell 12 cents to $3.29. Panhandle Eastern volumes came in at $3.27, down 22 cents.

Futures traders are circumspect about the chances of the cold weather continuing in the East. “We are waiting to see if this cold weather gets sustained,” said a New York floor trader. “I don’t think it’s going to happen. I think we will pull back a little bit more to the $3.25 to $3.30 level. On the high side next week I see $3.54 to $3.55 and on the downside $3.25. There is options expiration on Monday so I think we’ll linger in this $3.40 to $3.50 area.”

Analysts contend that Thursday’s “strong counter intuitive price response to a seemingly supportive storage figure reinforces our opinion of a market destined to head south for the balance of the winter even allowing for some occasional cold trends,” said Jim Ritterbusch of Ritterbusch and Associates. “The 172 Bcf draw exceeded average industry ideas by about 7-8 Bcf and forced additional contraction of 15 Bcf in the y over y deficit that now stands at 157 Bcf. Regardless, this market is sending off signals that the weather factor will be of limited importance just a few weeks down the road.”

Ritterbusch concedes that in the near term “while the current updated forecast still skew bullish in our view, with polar air sinking into the upper mid-continent next week and with the first week of February generally showing below normal temperature trends across the eastern half of the country, deviations from normal don’t appear sufficient to encourage broad based buying interest from either the commercial or speculative entities.

Weather forecasts have turned colder in the near term. Commodity Weather Group in its six- to 10-day outlook predicts below to much below normal temperatures north of a sinuous line from Idaho to South Dakota to Mississippi to Maine.”The 6-10 day has shifted/changed in the colder direction [Friday], while the 11-15 day has moderated. The next expected strong burst of cold air has leap-frogged at least a day faster with the main focus of the coldest anomalies now in the last part of the 6-10 day,” said Matt Rogers, president of the firm.

“We still see a very impressive warming out ahead of it early next week, but the cold air is flooding the Midwest and then East Coast faster than forecast yesterday. This also takes the punch of cold air out of the 11-15 day range, which leaves it with a more variable, but still cold-leaning pattern in the North and East. The models have definitely varied on day-to-day details, but they are in general agreement on a below-normal range in temperatures for most of the Midwest and East Coast with occasional reaches into the Deep South.”

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