Physical natural gas for delivery over the extended holiday weekend eased in Friday trading as multi-dollar weather-driven losses in New England skewed the overall average lower.

Gains in Texas, Louisiana, and the Midcontinent for the weekend through Tuesday were offset by setbacks in the Northeast and Midwest, and the NGI National Spot Gas Average fell 4 cents to $3.51.

Futures continued to build on Tuesday's 28-cent gain, and at the close on Friday January had added 12.4 cents to $3.662 and February was higher by 11.5 cents to $3.678. February crude oil rose 7 cents to $53.02/bbl.

New England points took the day's biggest hits, dropping close to $4 at some points as weather forecasts called for a round of mild temperatures leading into the weekend. forecast that Boston's Friday high of 45 degrees would ease to 44 by Saturday before easing to 39 by Monday, the seasonal norm. New York City's Friday peak of 46 was anticipated to slide to all of 45 Saturday before rising back to 48 on Monday, 7 degrees above normal.

Gas at the Algonquin Citygate tumbled $3.38 to $4.91, and gas on Iroquois Zone 2 was down a penny to $4.52. Packages on Tenn Zone 6 200L came in at $5.47, lower by $3.82.

Gas on Texas Eastern M-3, Delivery shed 7 cents to $3.08, and packages bound for New York City on Transco Zone 6 dropped by a dime to $3.25.

Other trading centers were firm. Gas at the Chicago Citygate added a penny to $3.53, and deliveries to the Henry Hub gained 2 cents to $3.59. Gas on El Paso Permian rose 4 cents to $3.34, and gas priced at the SoCal Citygate changed hands 12 cents higher to $3.73.

Futures traders saw the day's gains as weather-driven. "This is a weather rally," a New York floor trader told NGI. "I look for the market to trade up to $3.72 and then back off."

Others saw a cornucopia of factors in play. "The natural gas market is pushing higher in Friday trade to levels not seen since Dec. 9, supported by a somewhat colder 11-15 day temperature forecast," said Tim Evans of Citi Futures Perspective. "Book-squaring ahead of the holiday weekend, options expiration on Tuesday, and the January futures expiration on Wednesday are additional features in today's trade."

More deferred weather forecasts called for cooling directed primarily to the West. In its 11-15 day Friday morning outlook, MDA Weather Services said, "The forecast trends colder in this period, with these changes focused from the West to the Midwest. This comes with model support, as well as the background MJO [Madden Julian Oscillation] tracking toward colder correlating phase seven. The forecast, however, remains slower than models with the evolution of cold air, keeping belows limited to the western half while promoting continued above normal coverage downstream in the South and East.

"Ridging near Alaska is a feature worth monitoring going forward as a cold signal, but models keep troughing focused over the West during this period."

Traders see a treacherous environment with the possibility of extended cold placing risk to the upside. "[W]e still view this week's dramatic two-day price spike as a possible exaggeration relative to the forecasts for another Arctic blast at around the New Year holiday," said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients. "Models continue to differ, and until a consensus develops in favor of a pronounced and lengthy broad-based cold spell, this market is apt to spend more time digesting the early week price pop. But we will also note that the market's sensitivity to any shifts in the forecasts toward abnormally cold trends will be heightened going forward now that a supply deficit against average levels is developing.

"Back-to-back large storage draws in excess of 200 Bcf have been efficiently discounted. But going forward into the heart of the heavy-usage period, a deficit supply situation could easily push nearby futures back to above this month's highs. This market has seen four distinct major price swings evenly divided between the up and the down side across this fourth quarter. As a result, this has provided a treacherous environment for position-type traders. We have, instead, focused on 'spreading' opportunities as an alternative strategy. After accepting profits out of bear spreads at the start of this week, we are now awaiting a significant reaction as an opportunity to establish bull spreads, such as long April-short December 2017."