Natural gas futures finished the week with another down day Friday as the weather outlook continued to antagonize winter bulls. The spot market was mixed ahead of the long weekend, featuring large declines in the Northeast and a big increase in Southern California amid new import restrictions; the NGI National Spot Gas Average gave up 4 cents to $2.41/MMBtu.

The March contract dropped 2.2 cents to settle at $2.558 Friday after trading as high as $2.589 and as low as $2.539. That’s down about 3 cents from the settlement the Friday before (Feb. 9) of $2.584 as the prompt-month skid that began earlier in the month at least showed signs of slowing down.

Technical indicators Friday pointed to an oversold market, Powerhouse President Elaine Levin told NGI.

“Typically when you’re oversold, it gives you a corrective bounce, or it can give you consolidation. So far it looks like we’re getting the latter,” she said. “Nobody’s really coming in and buying it, but we’re not seeing a huge push from the shorts either.”

That the March contract has been trading at a discount to April “is not a huge vote of confidence for the bulls’ side,” Levin added. “I think this market still overall looks more bearish than not. It’s just taking a break. We’ll have to see if any forecasts for cold weather can breathe a little life into the March contract. A lot can happen between now and the end of the contract” in terms of the March/April spread.

NatGasWeather.com said the burden falls to the weather models to convince the market that “meaningful cold” could make its way into the East during the remaining weeks of winter, which the midday data didn’t see happening “until at least March 2-3.

“For a sustained rally, obviously much colder temperatures over the eastern half of the country are going to be needed,” the firm said Friday. “Right now the data is quite warm and bearish, thus likely not able to trend much warmer than it already is, making the risk to the cooler side this weekend. But even if there are some cooler trends, is it really going to be cold enough to intimidate this market?”

Bespoke Weather Services said the models Friday were still depicting a pattern in the North Atlantic Oscillation into early March that could “help to return heating demand closer to average through the first week” of the month.

“The result will likely be a rather small change in gas-weighted degree day forecasts come Tuesday, though the long-range forecast should feature marginally more cold risks.”

In the spot market, SoCal Citygate continued its recent volatility, jumping 99 cents to $4.57. SoCal Border Average added 7 cents to $2.37.

Utility Southern California Gas Co. (SoCalGas) late Thursday announced new, unplanned maintenance is expected to cut about 250 MMcf/d of import capacity through its Needles points from Friday through Sunday, according to Genscape Inc.

“These points were limited to zero for a similar unplanned maintenance event Jan. 17-24,” Genscape said. “…To help compensate for the cut to Needles flows during that event, SoCalGas posted higher receipts from Kern at Kramer Junction.”

Forecasts on Friday showed moderate demand expected through the weekend, with SoCalGas projecting demand of around 2.4-2.6 Bcf/d through the weekend, the firm noted. “Genscape meteorologists are currently forecasting a significant cold snap to move in beginning Monday, however, meaning that if this maintenance is extended beyond the initially stated end date prices could spike further as SoCalGas seeks to meet increasing demand.”

During the previous maintenance at Needles, SoCalGas saw demand total around 2.5-2.7 Bcf/d, according to Genscape.

“Prices posted modest gains but did not exceed the previous two-week maximum, and even when demand crested at 3.2 Bcf/d later during that event, the movement on SoCal Citygate and Border basis prices was not significantly different from a previous cold snap when Needles was not restricted,” Genscape said. “That said, SoCalGas did rely on storage withdrawals much more heavily without Needles, posting an average 282 MMcf/d withdrawal during that event compared with no average withdrawals in the previous cold snap.

“System-wide storage inventory is currently 15.5 Bcf higher year/year, largely due to boosted Aliso Canyon levels, so SoCalGas has a healthy amount of storage to rely on if needed.”

Prices retreated in West Texas, especially Transwestern, which gave up 16 cents to $1.93. Waha dropped 7 cents to $2.01.

Analysts with Jefferies LLC have been tracking widening basis differentials at Waha, where they noted forward prices trading around $1.30 less than Henry Hub futures for Summer 2019. The analysts also pointed to fourth quarter financial results from Cimarex Energy Co., “one of the more gas-leveraged” Permian Basin operators.

The producer’s hedging disclosure, released as part of its 4Q2017 earnings, revealed that it “had added 3Q2019 hedges at El Paso Permian with a floor/ceiling of $1.65/1.80, giving some insight into Cimarex’s view of future local gas pricing,” the Jefferies team noted.

Booming growth in U.S. natural gas production — around 7 Bcf/d year/year — “coupled with large Northeast pipeline projects coming into service has started to shake up natural gas basis markets across many parts of the country,” analysts with East Daley Capital said in a note Friday.

“In fact, when you map out basis across the country so far this year, you will note that roughly three quarters of the country is severely under water,” the East Daley analysts wrote. While this negatively impacts producers, it also “presents an opportunity for midstream providers looking to secure new contract commitments.”

The firm pointed to Waha and Western Oklahoma, where “basis declines have already led to two new large-scale pipeline projects reaching final investment decision status” in the Gulf Coast Express and the Midship pipelines.

East Daley expects “widespread basis pressure in most regions outside the Southeast” and Gulf Coast “over the next few years as increasing production struggles to find the right balance…This pressure will create opportunities for some long-haul pipelines to expand, reverse or build greenfield to relieve the pressure and get more gas into the Southeast.”