Natural gas futures slid further Friday to cap a bearish week that saw production overshadow a supportive storage outlook as injection season looms. In the spot market, expectations for Lower 48 demand to decrease for the week ahead appeared to temper interest in three-day deals at most points, although colder temperatures in the East supported Mid-Atlantic prices; the NGI National Spot Gas Average retreated 8 cents to $2.40/MMBtu.

The April contract dropped 2.6 cents to settle at $2.591 Friday after trading both sides of even — as high as $2.627 and as low as $2.579. May dropped 2.3 cents to $2.633.

“Natural gas prices continued to grind lower through the week, closing just slightly above the $2.58 final support level we had been watching,” Bespoke Weather Services said Friday. “The decline was at first quite surprising given how supportive weather forecasts have been the last few weeks. However, through the past week we have continued to see production grow and nuclear outages stagnate in a time of year where they typically” increase sharply.

“The result is significant short-term loosening with less demand and very impressive supply, and recent Energy Information Administration (EIA) data has not done much to show the type of tightening we had expected.”

Powerhouse President Elaine Levin said the production appears to be “overwhelming” other factors as the market heads into the shoulder season. “The production numbers have been impressive, and here we are starting to talk about the injection season.

“Where the storage number ends up just doesn’t seem to matter. It doesn’t look like the market is concerned” about refilling inventories, Levin told NGI.

Levin pointed to $2.50-2.53 as a significant area of technical support. If prices were to move below $2.50, “that would bring the market into some territory that we haven’t seen in a while…We’re at the end of winter, here we are at mid-$2. We’ll see what comes next, but it doesn’t look good for the bulls, I have to say.”

On Thursday the EIA reported an 86 Bcf withdrawal from underground storage inventories for the week ending March 16, in line with market expectations ranging from the upper 80 to lower 90 Bcf range. For the comparable week last year, 137 Bcf was withdrawn from storage and the five-year average withdrawal for the week stands at just 53 Bcf.

Analysts with Tudor, Pickering, Holt & Co. (TPH) said the on-target withdrawal “indicated a move back toward weather-adjusted market balance, though heating degree day (HDD) data came in strong on nor’easter driven demand, driving the draw above five-year norms.

“Expect the trend to continue as colder than normal weather sustains, with early estimates for the week ending March 23 forecasting larger draws than normal on higher than normal HDD forecasts,” the TPH analysts said. “With supply continuing to chug along at a steady growth pace, we anticipate the market will continue to slide into neutral, cold weather aside.”

Storage withdrawals for March are on track to total 298 Bcf, the largest withdrawal for the month since 2014, OPIS analyst Jack Weixel told clients Friday. “The increase in withdrawals is due in large part to the relatively cold weather that has been persistent along the East Coast,” he said.

OPIS projections put end-of-March inventories just below 1,350 Bcf, which would be the lowest since inventories ended March 2014 at 857 Bcf, according to Weixel.

Genscape was calling for demand in California/Nevada to fall to around 5.6 Bcf/d Saturday and Sunday, down from 6.7 Bcf/d Friday and a recent seven-day average of 6.88 Bcf/d.

For gas delivery over the weekend and on Monday, SoCal Citygate tumbled 62 cents on Friday to average $3.04, while SoCal Border Average gave up 12 cents to $2.01, only a couple pennies above the 30-day low set earlier in the week.

Further upstream in West Texas, Transwestern dropped 15 cents to $1.56.

Elsewhere in Texas, price moves were mixed as most points traded close to Henry Hub.

South Texas exports to Mexico via the NET Mexico pipeline could see a reduction of more than 1.23 Bcf/d in the upcoming week due to maintenance on Mexico’s Los Ramones systems, according to Genscape.

For Wednesday and Thursday “the Los Ramones I system capacity will be reduced to 1,300 MMcf/d. This is a reduction of about 800 MMcf/d from the system’s design capacity,” the analytics firm told clients Friday. “Genscape’s proprietary estimate of monitored flows from Texas’ NET Mexico system to Los Ramones I have averaged a steady 2,034 MMcf/d month-to-date, suggesting flows will be cut by about 734 MMcf/d for the two days.

“Steeper cuts are scheduled to kick in March 30-April 1. During that period, Los Ramones I capacity will be reduced to just 800 MMcf/d. This will limit exports via NET by more than 1.23 Bcf/d versus the month-to-date average.”

This maintenance could affect even more volumes due to maintenance further south limiting throughput capacity on the Los Ramones II Norte system, according to Genscape. But “those downstream restrictions do not necessarily mean cross-border flows from Texas will decline as a result; volumes originating on NET can be diverted to Monterrey and/or Los Indios markets instead of moving down the the Los Ramones II Norte system.”

Coinciding maintenance on Tennessee Gas Pipeline could see South Texas molecules rerouted through the Texas Eastern Transmission Co. (Tetco) system, with Mexico also potentially relying on liquefied natural gas imports to make up for reduced volumes, the firm said.

Tennessee Zone 0 South fell 6 cents to $2.46 Friday, while Tetco South Texas added 2 cents to $2.58.