As traders had predicted based on Thursday’s below-expectations storage report, the accompanying March futures drop of nearly 19 cents and the usual extra loss of industrial load over a long holiday weekend, the entire cash market was united in softer prices Friday.

Quotes fell from a little less than a dime to about 30 cents, with a large majority of losses between 15 cents and a quarter. Northeast citygates, which had continued to rise Thursday while the rest of the market indicated that an uphill climb at midweek was starting to reverse, recorded both the largest and some of the smallest drops Friday. Sub-dime declines at Iroquois Zone 2 and Westcoast Station 2 were the only exceptions to otherwise solidly double-digit losses.

A marketer proclaimed that Friday’s price downturn “was all screen-driven,” resulting from the previous day’s drop in futures that itself was a result of the morning’s bearish storage report. Substantially cold weather was slated to remain into the weekend in the Northeast and Midwest and in parts of the South and West, he reasoned, so that fundamental price support must have been largely ignored by cash traders.

A Northeast trader said he saw little price movement up or down as the morning went on, although he reported finding some late extra buying interest from power generators in the region. The market was “pretty active” for a holiday weekend, with what he called “very good volumes” and not much range in quotes. Northeast basis ran from $1.20 to $1.40 over Henry Hub, depending on the point, he observed.

Because a regional warming trend was forecast to begin sometime Monday, the trader said quite a few counterparties sought deals in which supply was split up into Saturday-Sunday and Monday-Tuesday flows adjusted for the anticipated lessening of demand after Sunday. Although temperatures will be easing a bit early this week, he said, they will stay below normal through bidweek. Whether that can hold prices up is still in question, though, he added.

A Midcontinent marketer agreed that no real trend surfaced while trading proceeded. Prices stayed fairly close to where they started, which yielded relatively narrow ranges, he said. Even with all points going down, “I was surprised at how strong cash numbers were” after the storage report indicated that supplies will remain plentiful through the fast-approaching end of heating season, the marketer said.

Friday was typical of a day preceding a holiday weekend, sources said, with brisk morning trading followed by “just about everybody” wrapping up their workweeks early in the afternoon.

Lehman Brothers analyst Thomas Driscoll said the weaker-than-anticipated 98 Bcf withdrawal reported for the week ending Feb. 11 “has left the storage overhang versus the five-year average at 313 Bcf with the historically ‘coldest’ days of the year behind us. Another forecasted week of warmer than normal weather [for last week] will not help. We will need sustained colder than normal weather — or perhaps lower prices — to pull storage down to the five-year seasonal average level of just above 1.0 Tcf by April 1…” Driscoll calculated that if the market achieves the five-year average withdrawal rate for the remaining weeks of the heating season (adjusted for normal weather), it will end winter with nearly 1.3 Tcf in storage.

©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.