With many areas in transition toward milder temperatures again, flat Dawn and NOVA Inventory Transfer quotes were the only exception to falling cash prices Thursday. The previous day’s 27.6-cent drop by expiring March futures added to the bearish mood.

Northeast citygates recorded the biggest losses by far as they gave back most of Wednesday’s spikes. Overall declines ranged from a little less than a nickel to nearly $5.85, but outside the Northeast they were capped at around half a dollar.

The Energy Information Administration’s estimate of a 151 Bcf storage withdrawal during the week ending Feb. 22 was slightly less than consensus expectations. But since it further reduced the year-on-five-year average surplus, Nymex traders made a bullish response in pushing April natural gas futures 38.3 cents higher in their prompt-month debut (see related story). The contract had supplementary support from the nearby crude oil trading pit, where April crude skyrocketed nearly $3 to establish yet another record high settlement at $102.59/bbl.

Winter weather has not vanished from northern market areas, as a fast-moving low-pressure system will bring more snowfall Friday first in the Midwest and later the Northeast, according to The Weather Channel. But there was some easing of heating load as sections of those regions will see high temperatures rise as much as 10 degrees or so Friday.

The latest blast of cold was proving to be very short-lived in much of the South, especially in its eastern end. Atlanta and Columbia, SC, were expected to see highs rise about 10 degrees Friday. In contrast, Memphis, TN, will see its high and low virtually unchanged from Thursday.

A cold front moving into the Northwest Friday while snow continues in the Rockies limited Rockies losses to about a dime. The desert Southwest has turned very mild with highs around 80 predicted for Friday.

Although it projected that system linepack would rise above its maximum target level Friday and Saturday, PG&E did not issue an OFO.

A utility buyer in Florida said he wasn’t seeing nearly as much demand for intraday gas as there was Tuesday and Wednesday when gas-fired peaking generation units were getting fired up to make up for power outages in the state. Noting that Florida Gas Transmission (FGT) kept an Overage Alert Day (OAD) in place despite milder weather arriving in the Sunshine State (Orlando was expected to see a high around 70 Friday), he said quite a few FGT customers have long imbalances on the pipeline, which he thinks means the OAD will be extended through Friday. “FGT is afraid of big overburns Friday” from people going overboard on cleaning up those imbalances before the month ends, he said, adding that weather-wise, there’s not enough load to justify keeping the OAD.

March indexes will be much higher, the buyer said, noting that March futures closed almost a dollar higher than February. He was seeing Florida Gas Zone 2 numbers in the mid $8.90s, while Zone 3 was priced throughout the $9.10s, he said. Basis was much weaker than a month ago due to entry into a shoulder month, he said, but absolute prices made big-time jumps.

A Northeast utility buyer said the big question internally at his company was: Why such a big futures jump Thursday? There was some speculation that the gas contract was riding the coattails of $102/bbl oil, he said. Also, the perception of a huge abundance of storage is starting to fade now that a colder-than-expected February has taken a big bite out of the year-on-five-year average surplus, he added. However, the utility has remained on schedule with its storage withdrawals, he said.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.