As could be expected, weekend warming trends in many parts of the U.S. and Canada combined with a forecast of above-normal temperatures in most of the eastern two-thirds of the U.S. this week to keep prices falling at all points Friday. The previous day's March futures drop of nearly 6 cents in the face of a nominally bullish storage report and the usual weekend decline of industrial load put further downward pressure on the cash market.

Losses ranged from a little less than a dime to the $1.95 area. Transco Zone 6-New York again recorded the day's largest decline.

The continuation of triple-digit drops had Northeast citygates trading below $5 after most of them were averaging in the $9-11 range as recently as last Tuesday.

Futures will continue to deny cash prices any positive backing Monday after the March contract slipped another 7.6 cents lower Friday (see related story).

The bearish landscape isn't receiving any support from the supply side. Rigs targeting the top 13 unconventional gas formations continued an upward trend and increased slightly week-over-week to a count of 955, according to NGI's Shale Daily Unconventional Rig Count published Monday (www.shaledaily.com). Led by year-over-year gains in the wet or "oily" plays such as the Niobrara-DJ Basin (350%), the Eagle Ford (120%) and the Cana-Woodford (119%) the number of unconventional rigs has increased an average of 25% compared with Feb. 12, 2010 levels.

Transportation woes were not significant Friday. What was deemed a "possible rupture" on the Tennessee system in Ohio did not cause any reported injuries (see Transportation Notes; related story). Although some limits on service may become necessary, no shipper services were impacted Friday and it was not certain at that point that any restrictions will have to be implemented, the pipeline said.

Much of the nation's snow cover will be wiped out toward the end of this week, predicted AccuWeather.com meteorologist Heather Buchman. As of Thursday roughly 65% of the contiguous U.S. was covered with snow, according to the National Operational Hydrologic Remote Sensing Center, Buchman said. In addition, 49 states had snow on the ground Thursday and Friday morning, even including Hawaii, with some snow atop Mauna Kea mountain. Only Florida lacked any snow cover.

In Buchman's report Friday, she said Henry Margusity, AccuWeather.com senior meteorologist, expects this week's warm-up to reduce U.S. snow cover to about 25%. Areas where it likely will be wiped out include the southern and central Plains, interior Southeast, Ohio Valley and parts of the Mid-Atlantic, according to Margusity.

The Houston Ship Channel, which fell a little more than a dime, saw its volumes on IntercontinentalExchange (ICE) drop sharply from 257,600 MMBtu Thursday to 131,600 MMBtu Friday. However, Henry Hub softened even further by just over 15 cents, ICE said, but hub volumes rose slightly from 772,300 MMBtu to 773,400 MMBtu.

Chicago, which was forecast to peak just above the freezing level Saturday, had citygate quotes fall about 20 cents while the point's ICE trading volume plummeted from 1,024,900 MMBtu Thursday to 716,700 MMBtu Friday.

A Midwest utility buyer said high temperatures in the area had just started getting slightly above freezing recently, and she was encouraged to see "some melting ice already." The company had observed gas use by customers getting significantly lower since earlier in the week, she said. However, she thinks there will probably be "at least one" more cold snap due before this winter ends; at least it would give a temporary boost to utility throughput again, she said.

Noting that the utility must empty its storage accounts by the end of May, the buyer said a lengthy string of System Overrun Limitations (SOL) by Northern Natural Gas had hampered that activity to some extent. The utility had used much of its storage pulls in the last two weeks for balancing purposes, she said; it would have liked to withdraw more, but the SOLs kept a lid on that.

It's time for below-normal temperatures to cover the West from the Rockies to the Pacific Coast for the next seven to 10 days after the East endured most of the coldest weather in the past two weeks, commented a western trader. However, the cooldown in his region is not expected to be especially harsh, though, so it should be fairly smooth sailing in western markets for a while, he said.

Buyers in the West were occasionally having a tough time lining up supplies in the Jan. 31-Feb. 4 week, the buyer added; "we were competing against gas" in the Rockies and Waha area that was trying to move eastward to higher-priced markets.

©Copyright 2011 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.