A few points again were flat to moderately higher going into the weekend, but the cash market largely repeated Thursday’s activity in recording mostly substantial declines at a large majority of locations Friday. The usual weekend drop of industrial demand and some doubt about whether the latest bout of winter-like weather would last long enough and be severe enough to put much of a dent in lingering storage surpluses over year-ago and five-year average levels apparently were responsible for many traders’ bearish moods.

Freezing-area lows in the Pacific Northwest and even lower temperatures in the Rockies prompted Sumas to see the biggest gain among the scattered points that were flat to a little more than 17 cents higher. The rest of the cash market recorded losses ranging from a couple of pennies to nearly half a dollar. After leading most of the price ascent during the first three days of last week, Northeast citygates were again out in front on the way back down.

The futures euphoria resulting from Thursday’s report of the season’s first storage withdrawal — albeit a wee one of 1 Bcf — evaporated rapidly, with Nymex traders possibly having second thoughts about the continuing inventory surplus in pushing the January gas contract 6.4 cents lower Friday (see related story).

Despite a high-linepack OFO by SoCalGas as an additional bearish factor (see Transportation Notes), declines of about 15 cents and 20 cents at the Southern California border and SoCal citygate, respectively, were approximately in the middle of the pack of overall losses.

A western trader said the SoCal OFO tends to force more gas into the PG&E system as suppliers seek alternative California homes for their gas. For that reason don’t be surprised if PG&E needs to follow up with its own high-inventory OFO fairly soon, he added.

PG&E’s return Thursday to its normal OFO system (see Daily GPI, Dec. 1), following a month-long series of simultaneous high/low-inventory OFOs that created a fairly narrow daily tolerance band, probably makes it a little easier for power generators, he said. They tend to get their next-day load requirements late each afternoon and were having to work with limited tolerances even though loads could shift quickly, the trader said. He didn’t think the change made much difference to core gas buyers because they know their next-day loads fairly early each morning and the load is less susceptible to major shifts.

The trader said his company recently began drawing from storage due to forecasts of colder weather in the West during the weekend.

Northern Natural Gas projected frigid conditions for its Upper Midwest market area as this week begins. A bulletin board posting said that compared to a normal system weighted temperature of 25 at this time of year, the average would sink from a relatively moderate 31 Saturday to 24 Sunday and 17 Monday.

Except for an ongoing imbalance warning in upstream Zones 0-4 that has been in effect on Tennessee since about mid-November, few pipeline restrictions of any substance are currently in place. However, El Paso said linepack had returned to normal Friday after being at undesirably high levels Thursday. Meanwhile, after reporting “healthy” linepack several days in a row, Westcoast said Friday it was starting to slip below minimum target levels. And on the other hand, Gulfstream said Friday linepack was “currently at the high end of Gulfstream’s range of acceptable operating levels.”

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