Although freezing temperatures lingered on in Midwest and Northeast markets, weather-related demand was fading in the rest of the nation Monday, and it was only a matter of time before the Midwest and Northeast got their own warm-ups going. With a highly negative screen providing an extra push over the edge, it was hardly surprising to see cash prices falling between about 15 and 70 cents at nearly all points.

California and Sumas formed lonely bastions of relative strength with barely higher or lower numbers, fueled primarily by a PG&E low-linepack OFO that carried zero tolerance for negative imbalances (see Transportation Notes).

The northern Plains and Upper Midwest could expect one more arctic front but little snow to move in Tuesday, but then more spring-like conditions were due afterward. As The Weather Channel put it, “Mark Wednesday on your calendar as the beginning of the end (of winter)” in the Midwest.

“It’s still cold here, but we should be getting up to 45 degrees Saturday,” said a Northeast utility buyer. That would be equivalent to a heating degree day (HDD) measurement of 27 then, she added, which would compare with 41 last Thursday. “It (HDDs) was running 54 (very cold) on Friday, up from 44-46 early last week,” she went on. Normally HDD levels should be in the low to mid 30s for early March, the buyer said. “Oh well, it was Feb. 2 when the groundhog said six more weeks of winter, and those six weeks are just about up,” she went on. “We’ll be glad to say ‘so long’ to this winter.” Very few pipe restrictions were left other than Texas Eastern and Algonquin continuing to disallow due-shipper imbalance nominations, and those shouldn’t last much longer, the buyer concluded.

A Florida utility buyer quoting citygates at just over $7 said area weather was “warm, but nice and breezy.” It’s a fairly quiet softening market, he said, adding, “We’re just trying to figure out what war with Iraq is going to do to oil prices and subsequently to our gas prices.”

Temperatures have warmed up considerably in the Rockies, so prices were dropping there the same as in nearly every other market, a western trader said. He also noted that although Waha/Permian Basin gas continues to see some demand from the Midcontinent/Midwest, “loads in the intrastate Texas market have dropped off to almost nothing with the nice weather there.”

A Southwest utility buyer said that although weather was getting warmer, there still wasn’t much power demand in the region. San Juan-Blanco recorded a very tight trading range, she added, and while the basin’s Bondad “started out at a very wide $4.20-50 two-way range, it then narrowed to the mid to high $4.30s when trading got active.”

Analyst Thomas Driscoll of Lehman Brothers estimates that this week’s storage report “will be a withdrawal of about 135 Bcf (45 Bcf more than our previous estimate of 90 Bcf, due to colder than estimated weather) compared to 91 Bcf a year ago and a five-year average withdrawal of 63 Bcf.” Interestingly, Driscoll looks for the year-on-year deficit to begin contracting a week later, saying, “We estimate that next week’s storage report will show a withdrawal of 15 Bcf, compared to a withdrawal of 92 Bcf a year ago and the five-year average withdrawal of 87 Bcf.”

Salomon Smith Barney’s Kyle Cooper said his “final estimation for this week’s EIA report looks for a draw between 135 and 145 Bcf…While estimations are as accurate as possible, they remain just estimations and thus our confidence level remains low for this week. We would state that a draw of 125 Bcf would surprise us less than a draw of 155 Bcf due to strictly demand loss considerations. However, from an operational perspective, since it was the first of the month, some operators who had already withdrawn their allotment for February would have been able to pull gas [again] last week since it now represented withdrawals against March allotments. This obviously adds to the overall uncertainty.”

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