With heating load starting to dwindle and with a prior-day plunge of nearly 70 cents in January futures, cash prices continued Thursday the steep slide that had started on Wednesday. All drops were pretty sizeable in ranging from a little less than 40 cents to around $1.30. Northeast citygates again took most of the dollar-plus hits.

Although snow events or near-freezing temperatures will persist into the weekend across sections of the northern market areas, the worst of this week’s cold weather was largely in past tense Thursday. And an ice storm that knocked out electric service across a wide swath of Georgia (see story in Power Market Today) was due to be melting Friday with Southeast temperatures at or above freezing, The Weather Channel said. Meanwhile, severe cold will largely be confined to sparsely populated areas of the upper West.

The weather situation portends further cash market softness Friday, especially when combined with Thursday’s humongous drop in futures and the slump in industrial load that typically accompanies a weekend.

The Energy Information Administration ostensibly presented the market with a bullish influence when it reported 202 Bcf being withdrawn from storage during the week ending Dec. 9. The volume came in barely under the top of previous estimates but clearly exceeded the 160-190 Bcf common range of guesses that centered on the 170s Bcf. However, after rallying to spend some time in positive territory following the report, the screen turned south again in a big way and wound up the day a stunning 89.8 cents lower. That further extended the previous day’s loss of 69.9 cents.

Southern Natural Gas remains the only pipeline with an OFO in effect Friday, and it hinted that the order might be lifted Saturday (see Transportation Notes).

Western Canada is rather seasonally moderate at this point, according to a producer who said it was freezing in Calgary Thursday afternoon but “not crazy cold.” The area is usually colder in mid-December than it is currently, he said. He applauded the screen’s two-day plunge, saying the natural gas futures market “needed to come off a little” from its recent overheated highs.

The producer said the current weather pattern was starting to look somewhat like the 2001-01 winter “in going from extreme cold to unusually warm.” He expects cash numbers to keep falling Friday, “but not as much as Nymex did” Thursday. A little bit of cold coming back into the Midwest this weekend should prevent extreme drops, he said, adding that he would guess the Chicago citygate will fall 60 cents or so. He noted that Chicago was settled between the two Michigan citygates Thursday after having traded at a significant premium to Michigan deliveries last week.

Explaining that she had been in meetings all day, a Gulf Coast producer commented, “All I know is that storage came out very high and futures recovered their losses.” As if to show how “out of it” she’d been, the producer said she didn’t even know that the screen had taken such a steep dive after she last looked at it Thursday morning. She added that she was getting the sense that the market is content to settle down for a while and not get especially active again until after the holidays.

Minerals Management Service (MMS) said 52 companies reported 2,227.74 MMcf/d Thursday in remaining Gulf of Mexico shut-ins related to Hurricanes Katrina and Rita. That was down 84.47 MMcf/d from Monday (MMS switched from daily to twice-a-week reports on shut-in statistics this week) and down 119.05 MMcf/d from last Friday. Cumulative deferred production since Aug. 26, just before Katrina struck, now totals 532.932 Bcf, or 14.601% of the Gulf’s normal annual output of about 3.65 Tcf, MMS said.

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