The cash market continued its break from the pattern of mixed pricing that prevailed every day last week. The direction of price movement was uniform at all points again Tuesday, but this time it was down instead of up. Moderating weather trends in the Midwest, to be duplicated to a lesser extent over the rest of the week in the Northeast, combined with the pre-existing scarcity of heating load in the South to ease overall spot gas demand.

Monday's 20.8-cent retreat by the expiring March futures contract, which ended a streak of gains dating back to more than a week earlier, also contributed to Tuesday's cash weakness.

Temperatures will remain below average in much of the West and be accompanied by snowy storminess in the mountainous areas through about Friday before turning milder over the weekend, according to The Weather Channel. That was likely why the smallest of Tuesday's losses, which ranged overall from a little less than a dime to 40 cents or so, tended to cluster at western points.

Even with February-ending quotes down across the board, a solid majority of points managed to finish the month with double-digit premiums to first-of-month indexes. Those that were trading below indexes were concentrated in the Northeast, Midcontinent and Rockies.

Northern Natural's Demarc and Ventura points both fell a little more than 30 cents as the pipeline, whose bulletin board said the normal system weighted temperature at this time of year is 26 degrees, projected that the average would rise from 27 Tuesday to 29 Wednesday before falling back to 24 Thursday and 20 Friday.

It's getting a little warmer and the end of winter is drawing nearer, which is all anyone needed to know about why prices turned softer, said a marketer in the Lower Midwest. His company found little heating demand for Wednesday and buyers were scarce, which may have reflected heavy storage use, he said. It seems that cash prices need to come off some more because gas still seems overvalued at current levels, the marketer added, so he would expect milder weather and screen weakness (April futures fell 17 cents in their prompt-month debut Tuesday) to keep cash quotes falling Wednesday.

The marketer reported not being aware of anyone still trading March baseload Tuesday, saying his company had wrapped up bidweek business the day before. He said it seemed to him that most people thought indexes were pretty well set on the first day or so of bidweek and rushed to finish early; he saw little change in March prices from last Thursday through Monday.

It was no surprise to an industrial end-user based in the Chicago area that cash prices had started to drop. Local high temperatures are currently in the mid to high 30s, he said, and should be rising into the 40s Wednesday "and maybe 50" on Thursday. Bidweek was "uneventful," he said, except for gas on Trunkline continuing to be a little harder to find than on other Gulf Coast pipes; he was not sure why. However, because of plentiful LNG supplies recently at the Lake Charles facility, Trunkline-West Louisiana gas was cheaper than in the pipeline's East Louisiana pool, he said.

Moderating weather was not universal. "It snowed earlier today," said a utility buyer in the Pacific Northwest, so winter is still making its presence felt in the region. March is a low-demand period for the utility, and it had all of its modest requirements lined up well ahead of bidweek, she added.

Although many forecasters continue to expect a relatively mild March, Weather 2000 anticipates some bullish weather remaining. The Midwest, Ohio Valley and Northeast regions will to see routine waves of below-normal March temperatures along with snow and ice events, the consulting firm said in a Tuesday advisory. "Anticipate a very fast-moving national flow, with lots of cross-continent storm tracks and much more week-to-week and intraweek volatility than we have seen in previous months this winter. There are still tremendous stores of polar and arctic air in Canada that can, and will, be drawn down" into the U.S. "An abnormally high 42% of the nation has snow cover at this date, exemplifying how resulting weather in these areas keeps coming in colder and snowier than models predict, which also cools future air masses down and keeps 'warm-ups' at bay."

The National Weather Service (NWS) generally expects a cool East and a mild West in its forecast for the March 5-9 workweek. The agency predicts below-normal temperatures everywhere except peninsular Florida east of a line running southward along the Indiana-Ohio border into western Tennessee; the area for below-normal readings extends into northern Wisconsin and Minnesota at its upper end, and into most of Louisiana along with southeast Texas at its lower end. NWS looks for above-normal conditions in nearly all of the West except the northwest half of Washington state and northern Montana, with such conditions bulging into the central U.S. through the Midcontinent to as far east as the western half of Missouri.

Analyst Tim Evans of Citigroup expects a storage withdrawal of 130 Bcf to be reported for the week ending Feb. 23, which would mean virtually no change from the five-year average of 129 Bcf. Strategic Energy & Economic Research's Ron Denhardt looks for the year-on-five-year surplus to be reduced further, saying his estimate is for a pull of 146 Bcf.

©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.